Welcome to the Carter's third quarter fiscal 2025 earnings conference call. On the call are Doug Palladini, Chief Executive Officer and President, Richard Westenberger, Chief Financial Officer and Chief Operating Officer, and Sean McHugh, Treasurer. Please note that today's call is being recorded. I'll now turn the call over to Mr. McHugh. Thank you, and good morning, everyone. We issued our third quarter 2025 earnings release earlier today. The release and presentation materials for today's call are available on our investor relations website at ir.carters.com. Note that statements on today's call about items such as the company's expectations and plans are forward-looking statements. For a discussion of factors that could cause actual results to vary from those contained in the forward-looking statements, please see our most recent SEC filings and the earnings release and presentation materials posted on our website. In these materials, you will also find reconciliations of various non-GAAP financial measurements referenced during this call. After today's prepared remarks, we will take questions as time allows. I will now turn the call over to Doug. Thank you, Sean, and good morning, everyone. Now almost seven months into my role as Carter's CEO, our business transformation has accelerated as core tenets of new strategy take hold. Consumer response to new products and stories is strong, and engagement levels are rising as a result, most notably among young Gen Z families with whom we must win. That said, our current results don't represent my ambition for Carter's, nor where I believe we can be. There remains meaningful work to be done to eliminate costs, enhance productivity, excise non-value-add complexity, and exhibit consistent growth in revenue and profitability. I'll share some of what we're doing against these objectives shortly, but first, let's get an update on Q3 results from Richard. Thank you, Doug. Good morning, everyone. I'll cover our third quarter performance, and then a bit later, I'll provide some thoughts on our outlook for the business over the balance of this year and into 2026. My comments this morning will track along with the presentation materials posted to the investor relations portion of our website. Beginning on page two, we have our GAAP basis P&L for the third quarter. On third quarter net sales of $758 million, our reported operating income was $29 million, and reported earnings per share were $0.32 compared to reported EPS of $1.62 last year. On page three, we have our GAAP basis P&L for the first nine months of the year. On year-to-date sales of nearly $2 billion, our reported operating income was $59 million, which represented a 3% operating margin. Year-to-date earnings per share were $0.75. Our third quarter and year-to-date results included a number of significant one-time charges, which we've summarized on page four. These charges have been treated as adjustments to our reported results. In the third quarter, we completed the termination of our legacy OshKosh B'Gosh pension plan and recorded a non-cash after-tax charge of approximately $7 million. This final charge is in line with the amount we previously disclosed on our second quarter earnings call. We also terminated our deferred compensation plan in the third quarter, and as a result, recorded a one-time incremental tax charge of approximately $0.8 million. Finally, our third quarter reported results included a charge related to organizational restructuring of approximately $6 million for severance and other employee separation benefits. We expect to record an additional charge of up to $5 million in the fourth quarter related to this organizational restructuring. These charges largely represent cash severance, which we expect to pay to affected employees throughout the first half of fiscal year 2026. We will talk more about our organizational restructuring later in today's call. On a year-to-date basis, we've incurred approximately $13 million in costs, including just under $4 million in the third quarter, relating largely to third-party professional fees in support of improving our product and brand development processes. These costs are a continuation of previously announced initiatives to improve our operating model capabilities. We have been transitioning the work related to these initiatives from external consultants to internal resources and estimate we'll incur additional related charges of less than $2 million in the fourth quarter. Our year-to-date results also included approximately $8 million related to our leadership transition earlier in the year, including approximately $0.5 million in the third quarter. With all that said, my comments this morning will speak to our results on an adjusted basis, which excludes these meaningful charges. On page five, we have our third quarter adjusted P&L. Third quarter net sales were $758 million, comparable to a year ago. Third quarter is historically our second largest of the year, surpassed only by the fourth quarter. I'll cover more detail of our business segment performance in a moment, but at a high level, relative to last year's third quarter, we had net sales growth in our U.S. retail and international segments and lower sales in U.S. wholesale. On the nearly $760 million in net sales, our gross margin was 45.1%, a decrease of 180 basis points versus last year. This lower gross margin rate was largely due to higher product costs, including higher tariffs and additional investments in product make to improve the competitiveness and relevancy of our product assortments. The gross impact of tariffs on gross margin was $20 million in the third quarter. On a consolidated basis, we made good progress in raising prices, which were up in the low single digits, but this higher pricing did not fully offset the higher product costs in the quarter. Our U.S. retail business made particular progress in raising prices. Third quarter AURs in U.S. retail increased in the mid-single digit range over last year. Third quarter adjusted SG&A was $308 million, up 8% over last year. The drivers in the quarter were similar to what they've been throughout 2025, namely higher store-based expenses across our North American store portfolio, higher marketing, and higher provisions for variable compensation. The growth rate in spending in the third quarter was less than in the second quarter, and we're planning for a lower growth rate in total spending in the fourth quarter and into 2026. Adjusted operating income in Q3 was $39 million compared to $77 million a year ago. Below the line, net interest costs were comparable to last year, and our effective tax rate was 21.8%, up 430 basis points versus last year. We've planned our full-year effective tax rate at approximately 24% versus 19.6% in 2024, due mostly to the implementation of a global minimum tax in Hong Kong and stock option expirations earlier this year. With all of that on the bottom line, third quarter adjusted earnings per share were $0.74 compared to $1.64 last year. On page six, we have a summary of our third quarter performance by business segment. As mentioned earlier, consolidated net sales were comparable to a year ago. The roughly $15 million in growth between U.S. retail and international was offset by a similar decline in sales in U.S. wholesale versus last year. Adjusted operating income declined just under $40 million, with U.S. retail and U.S. wholesale contributing roughly equally to the decline. Profitability in our international business declined slightly versus a year ago. Now turning to some additional details of our third quarter performance in U.S. retail on page seven, our net sales in retail grew by 3% in the third quarter, with a positive 2% total retail comp, building on the similarly positive comp, which we posted in the second quarter. Our objective is to return to consistent growth in comparable sales, so we were pleased with this result. We had comparable sales growth in both channels in the quarter, stores and e-commerce, and an anniversary of last year's successful Labor Day period, with good performance in this year during this key promotional period. As I noted earlier, consumers accepted higher prices in the quarter. Our mid-single digit increase in AURs resulted in a low single digit increase in average transaction values. From a product point of view, baby continues to be a key driver. It's our largest product category, and we posted sales growth here for the fifth consecutive quarter. We also saw good growth in toddler, which represented our strongest performance in this age segment so far this year. Relative to last year, we grew share in both the baby and toddler categories. U.S. retail also benefited from an improved inventory position versus the first half. We entered the third quarter with less carryover of prior season goods, helping new seasonal product to perform well. In general, consumers continue to respond well to newness and the better part of our assortments. Our inventory investment in the bigger kids' size segment also helped us to post sequential trend improvement in this part of our business, and we had a strong back-to-school selling season. We did invest in incremental marketing in the third quarter. We're seeing good indications that our relevance with consumers is increasing, with unaided awareness of the Carter's brand up significantly year over year and a continuation of progress in acquiring new customers driven by the strength of our baby business. Retail profitability was lower in the quarter for many of the reasons already cited: higher product costs, partially offset by improved realized pricing, the investment in marketing, and expense de-leverage despite the positive comp in the quarter. Now turning to some additional detail on our third quarter performance in U.S. wholesale and in our international segment on page eight. In U.S. wholesale, sales were down versus last year, driven by lower sales in the Simple Joys component of our exclusive brands business. Demand for our Simple Joys brand on Amazon has been down this year. Simple Joys was a successful brand launch back in 2017, and this business grew rapidly as Amazon treated Simple Joys as effectively its private label brand in the young children's apparel space. In recent years, Amazon has changed its approach to how it manages brands, and as a result, we've seen more pressure in this part of our business. We're in the process of executing a new strategy in collaboration with Amazon. We envision that our core Carter's, OshKosh B'Gosh, and other brands such as Little Planet and Otter Avenue will grow in prominence in this important channel of distribution, and Simple Joys will reduce in significance over time. We will look forward to sharing more about our growth plans with this important customer. Elsewhere in the customer portfolio, sales with department store customers for the flagship Carter's brand were lower than a year ago, continuing the trend we have seen over an extended period. Our department store customers booked us down for fall, so this result was not a surprise to us. Department stores are projected to represent less than 20% of our overall wholesale channel sales for the full year. Profitability in the wholesale segment was impacted by the factors listed here, including higher net product costs, including higher tariffs and expense de-leverage. We had a good third quarter in international. Total sales were up 5%. We had lower comps in Canada, which we attribute to strong first half sales performance that likely pulled some volume forward into Q2 when the business posted a positive 7.6% comp, as well as a lower level of clearance inventory in the third quarter. We continue to see strong performance in Mexico, which achieved a plus 16% comp, with strong total sales performance given the contribution of new stores in this market. We saw strong growth in our international partners' business in the third quarter. Sales to these customers, which operate in a large number of international markets around the world, were up 10%, and we continue to see particular strength in demand from our partner in Brazil, Riachuelo. Overall, international segment profitability was down in the quarter but achieved a high single-digit operating margin of 8% in the third quarter. On page nine, we have some balance sheet and cash flow highlights. We ended the quarter with continued good liquidity. Cash on hand was $184 million, and we had virtually all of the borrowing capacity under our credit facility available to us. Net inventories at the end of the third quarter were $656 million, up 8% versus last year, with units flat year over year. The impact of higher tariffs on ending inventory was meaningful, approximately $34 million. Excluding the impact of higher tariffs, net income increased by 2% versus last year. The quality of our inventory heading into the fourth quarter was high, with excess inventory down meaningfully versus a year ago. The decline in cash flow was due to a combination of lower reported earnings and higher inventories, again in part due to the impact of tariffs on our quarter-end inventory balance. We historically generate the majority of our annual cash flow in the fourth quarter, and we're planning for strong operating cash flow for the fourth quarter, which is expected to yield positive operating cash flow for the full year. We've paid $47 million in dividends year to date. We had no share repurchases this year compared to about $50 million year to date last year. Maintaining a strong balance sheet has always been an important priority for us, and it's more important than ever given this highly uncertain environment. Our current credit facility matures in spring 2027. We've begun the process to put in place a new credit facility. We are pursuing an asset-based loan or ABL-type facility given its favorable pricing and flexibility relative to our current cash flow structure. To date, we have received commitments from our bank group members for a new five-year $750 million credit facility. We're planning to have this new facility in place in the coming weeks. Additionally, we're evaluating opportunities to refinance our existing $500 million in senior notes, which also mature in spring 2027. Conditions in the high-yield debt market are favorable right now. Carter's is an experienced issuer in this market and will share more details on our path forward here when appropriate. On pages 10 and 11, we have our year-to-date adjusted P&L and year-to-date business segment summary, and this information is included for your reference. I'll turn it now back to Doug for some additional thoughts. Thank you, Richard. I'm encouraged by several aspects of our third quarter performance. As we continue to fuel progress and momentum across our brands, I see more reasons than ever to believe we are returning to long-term, sustainable, and profitable growth. While we are steadying our business in 2025, there's still meaningful work to do for Carter's to unlock its full potential in terms of exceeding both consumer and shareholder expectations. We're actively managing Carter's in a highly uncertain world and marketplace, particularly as it relates to tariffs. We look forward to sharing more of our long-range plan in 2026. Closer in, we're focused on what we think is possible over the near term based on what we can control. To manage tariff impact, we've taken two primary actions. First, we're mitigating what we can through our supplier base, where Carter's world-class supply chain team has realized meaningful duty reductions of more than $40 million. Second, we've raised prices where necessary while striving to maintain Carter's exceptional value proposition. To date, B2C consumers are accepting higher prices while we have continued to grow our business. As Richard mentioned, Q3 is our second straight quarter of positive retail comp growth, and AURs are up mid-single digits, with average order values up low single digits. Taking price will continue to be a critical component of tariff mitigation moving forward. As we continue down the road of our ongoing transformation, it's imperative that Carter's deliver near-term profitability, which we can achieve most impactfully by reducing our cost base as growth initiatives build returns over time. We're right-sizing our company as well as preparing for our next phase of growth by optimizing our organization, infrastructure, processes, and tools. In doing so, we're taking several difficult but necessary decisions and have identified $45 million in gross savings for 2026. We will also continue to identify additional sources of productivity going forward, and we expect our assortment rationalization initiatives to have a sales and margin benefit over time. It's crucial that Carter's enhance our performance-driven culture, in which fewer people have greater ownership and accountability. To accomplish this, we plan to reduce office-based roles by approximately 15% between now and year-end 2025, saving roughly $35 million of the gross $45 million per year beginning in 2026. We believe these actions will streamline processes and decision-making at Carter's. The remaining $10 million in 2026 cost reductions will come through lower SG&A across multiple spending categories. These savings are expected to fuel near-term profitability while focusing Carter's on what really matters. Now, moving on to Carter's stores. As we've discussed previously, our physical store fleet must be honed. We are now targeting 150 North America door closures. Most of leases expire, up to 100 of which we expect to exit by the end of 2026. Closing these stores does result in short-term revenue loss, but historical perspectives suggest there will be offsetting sales transfer benefits by leveraging Carter's digital platforms, existing stores, and nearby wholesale partners. These closures will also allow us to free up SG&A associated with the fleet, one of our largest fixed assets. While we're pausing any further expansion of the current U.S. store model, the roughly 4,000 sq ft- 5,000 sq ft co-branded format we've been opening for several years now, we're investing in new store type testing, in-store experiences, and real estate strategy development as we seek greater fleet productivity, as well as differentiated consumer experiences as distinct specialty destinations staffed by experts. A core tenet of our transformation is to put the Carter's consumer at the center of all we do. We are removing internal complexity to bring our brands closer to market and deliver more of what our fans want. We're eliminating 20%- 30% of product choices in creating a more unified global product assortment across all our brands. We're leveraging a faster, more responsive design and development process that has excised a full three months from our product development calendar. Regular price sell-throughs have improved, demonstrating a sharper point of view in product design that truly resonates with consumers. Underpinning each action is the broader organizational objective of ensuring that our makeup, from personnel to infrastructure to systems and processes, reflects the agility necessary to both confront challenges and seize opportunities in a dynamic marketplace. A portion of these savings will be reinvested in our brands, where we believe Carter's can generate the greatest return on invested capital. In 2026 and beyond, we plan to spend more on demand creation, driving traffic and consumer loyalty beyond promotion and price. We're already investing here. In Q4 2025, our media spend is up 11% from last year. The results year to date show a strong correlation between marketing investment and increased sales. In 2026, our plan is to increase demand creation spend almost 20% or $16 million. Of course, we will manage the spend carefully to ensure maximum returns. Ongoing investment also applies to Carter's U.S. e-commerce, where the business is back to growing with our Q3 comps up as well as AURs. As we moderate promotional messaging in favor of brand and product storytelling, our brands are resonating more deeply with consumers online, especially young Gen Z families, with whom we have seen 17% growth in consumer counts year to date. IT investments fostering growth and productivity, such as digitization of product design and development, leveraging AI models, and cloud migration are being prioritized. We will also focus on foundational simplification by consolidating systems and platforms. With those comments, I'll turn it back to Richard to talk about our expectations for the balance of this year and into 2026. Thanks, Doug. Returning to our presentation materials on page 19, we continue to monitor the situation with tariffs and the considerable impact they have begun to have on our business. As we all know now, over the past number of months, significantly higher tariffs have been implemented, affecting imports from most every country, including those from which we source the majority of our products. These full reciprocal rates are much higher than those which have been in place historically and higher than what we have modeled and discussed with you all previously. The tariff rates now, in effect, bring our effective duty rate into the high 30% range versus about 13% historically. On a gross pre-mitigation basis, we've updated our estimate of the annualized incremental impact of the higher tariffs and now estimate that to be in the range of $200- $250 million. For 2025, we've estimated the net impact of the additional tariffs on operating income to be in the range of $25- $35 million. As Doug mentioned, we've been pursuing tariff mitigation strategies across multiple fronts, the most material of which are the planned pricing increases across our assortments. We're also closely watching recent news reporting regarding current trade negotiations involving countries where Carter's production has been most affected by the higher tariffs. The situation remains very fluid, and we're tracking the updates in real time. If there is relief ultimately provided by the Supreme Court on the overall issue itself of higher tariffs, we will obviously seek to recover the significant amounts already paid in additional tariffs to date. Turning to page 20, as noted in today's press release, we have not reinstated sales and earnings guidance given the ongoing and significant uncertainty regarding tariffs. We're still in the early days of gauging consumers' response to higher prices and seeing how our peers and the competition will deal with the challenge of tariffs. I'll try to be helpful in providing some perspective on how we're thinking about the fourth quarter. Historically, the holiday season has been a strong period in our business, as our products are a natural fit for this time of year as families with young children gather and celebrate together. Our teams, particularly in U.S. retail, are focused on continuing the momentum we've experienced over the last couple of quarters and delivering a strong finish to the year. We think our product and marketing initiatives, supported by a meaningfully improved inventory position versus last year, provide good support for a strong finish to the year. In our U.S. retail business, the combined November and December period has historically represented about 75% of our fourth quarter retail sales volume. The lion's share of our quarter is still ahead of us. We're planning a low single-digit comp in U.S. retail in the fourth quarter, which compares to a down 3% comp last year. We're planning continued progress and increasing AURs, although at a rate less than what we achieved in the third quarter, in part due to the more promotional nature of the fourth quarter generally. In last year's fourth quarter, we had particularly strong performance in late October over the Black Friday promotional period and during Christmas week. Our teams have put together a good promotional plan to comp our good performance in the holiday selling period last year, supported by this meaningfully improved year-over-year position in inventory and our increase in paid media. Comparable sales so far in Q4 are off to a good start. Our quarter-to-date U.S. retail comps are up about 7%. We're planning wholesale sales down in the low single digits in the fourth quarter, largely driven by an expectation for continued lower demand with Simple Joys. We've planned sales in the balance of our U.S. wholesale segment up in the fourth quarter. We're expecting sales growth in the international segment driven by Canada and Mexico to cap off what has been a good year in this part of our business. We're expecting gross margin rate will be down year over year in the fourth quarter, more so than what we had posted in the third quarter, in the neighborhood of 43% due to a larger gross impact of tariffs, investment in product make, and somewhat less of an offsetting benefit from pricing. As I said previously, our current estimate for the net impact of higher tariffs on fourth quarter earnings is in the range of $25 million- $35 million. Spending is expected to increase at a mid-single digit rate in the fourth quarter. This would be less than the rate of growth in SG&A in the third quarter. Below the line, we're planning for higher net interest costs and a higher effective tax rate than a year ago. As it relates to 2026, we're still developing our plans for next year, but on a preliminary basis, we're planning growth in both sales and earnings. Our sales growth will be planned higher than in a typical year, given the price increases we're putting in place in response to tariffs. Gross margin rate will likely be lower due to the net unfavorable impact of tariffs and changes in the mix of customers within the U.S. wholesale channel. We're expecting a substantial benefit in 2026 from our productivity initiatives, but the entire estimated $45 million in savings will not simply drop to the bottom line. These savings will help offset the significant impact of the higher tariffs, other inflationary pressures across the business, and will help fund investments we're planning, including marketing, as discussed. We'll have more to say about our expectations for the new year on our next call, which will incorporate the perspectives from the holiday season and our latest read on the outlook for the consumer and broader marketplace. We're tracking a number of risks, including the persistence of inflation throughout the economy and its possible impact on consumer demand across a wide range of purchase categories. We're also watching the overall level of consumer confidence and employment data, with both metrics showing some deterioration in recent months. With those remarks, I'll turn it back to Doug. Thank you, Richard. This next step in our journey comes at a pivotal moment for Carter's. While our transformation is still underway, we're seeing clear proof that our strategies are working and gaining momentum, and we must feed that inertia where we can yield the highest returns. I am sincerely grateful to all Carter's employees for their ongoing dedication to our business in creating this acceleration. We're also making deliberate, tough choices to strengthen our business and our profitability. There's much more to come, and we look forward to providing additional detail as we progress into 2026. Now I'll turn the call back to the operator for Q&A. Certainly. As a reminder, to ask a question, please press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again. Please stand by while we compile our Q&A roster. One moment for our first question. Our first question will be coming from Paul Lejuez of Citi. Your line is open. Hi guys, this is Kelly. Kelly on Kelly on from Paul. Thanks for taking our question. First one on, I have two questions, one in the wholesale channel, one on the retail side. First on wholesale, could you speak to a little bit more about what's happening with the Simple Joys brand exactly, like kind of what's the go forward? I think you mentioned you're going to maybe reduce that brand, but what's going to come in its place exactly? If you could just elaborate on the pricing that you're seeing in the wholesale channel. I think you mentioned pricing AURs up mid-single digits in Q3 and retail. Just curious where that is on the wholesale side and how that's looking for the spring. One follow-up on retail. Thanks. Sure. Kelly, I'll start out on wholesale, and I know Doug wants to add some comments as well. Simple Joys is the newest component of the exclusive brands portfolio. It's also the smallest part of that business. That brand launched back in 2017. It really was kind of a different time period. We had considered for a number of years offering the flagship, the core brands, Carter's, and OshKosh B'Gosh on Amazon. For a number of reasons, we had chosen not to do that back in that era. Simple Joys really was a terrific choice for that particular moment in time. We were treated extremely well by Amazon and really treated as their private label, which led to really rapid growth in the brand. I think we've just entered kind of a new phase with everything that they've had going on as a company and some choices that they've made around how they manage brands. We think probably the better path forward is now to revisit that decision around the core flagship brand. I think that's going to be the path going forward, taking the Carter's brand, the OshKosh B'gosh brand, and other brands that we may have in the portfolio. Amazon continues to be certainly a super important channel of distribution for us. Yeah, we're already building the framework necessary to lean into the Amazon model with all of our brands. I am confident that we will be able to build a much more meaningful, lasting business beyond Simple Joys with all the Carter's brands. To touch just briefly on the rest of the wholesale business, what I would share is that we have gone deep with our key accounts to really understand what unlocking future growth is. The back and forth on the right products to make, the right assortments to offer, has led to meaningful change in how we operate with our key accounts and the results that we're seeing through H1 sell-in. We don't have any sell-through on higher prices in wholesale yet. That won't impact us until January. On sell-in, we are seeing very positive results that lead us to believe that these higher prices will be accepted. I think it's also really important to keep in mind that the value proposition that we offer remains widely intact, even with higher prices, right? The style, the quality, the price that we offer our product at will continue to be a distinct competitive advantage for Carter's moving forward, even with the impact of higher pricing due to tariff mitigation. Kelly, your question on wholesale pricing in the third quarter, roughly comparable, which is kind of in line. We have more degrees of freedom in our own retail channel, and that's where the improvement in realized pricing occurred in Q3. Got it. Thanks. I just wanted to ask about the store closings. I think that you said that you would expect, once the 150 stores are closed, for that to be accretive to profitability. There's a sales transfer assumption there. Could you elaborate on what you're assuming for the sales transfer there and provide any other color on how you've seen this play out? Thanks. Sure. As the release indicates, it's about 150 stores that's across North America. It includes some stores in Canada and Mexico. To Doug's comment, the plan is to close the majority of those stores at lease expiration. There are a handful that we think may be subject to the kick-out clauses and would close before their natural lease expiration, but I think that would be in the minority. On a last 12 months basis, those stores did about $110 million in revenue. I would say they were kind of marginally profitable. Our history over time shows that there's about a 20% transfer rate to nearby stores and to our e-commerce channel. Leveraging the fixed cost and the asset base that's already in place, those tend to be pretty high margin flow-through. We would expect this at the end of the day to be accretive to operating income relative to the small margin that those stores are generating today. Thank you. Best of luck. Thank you, Kelly. Our next question will be coming from Jay Sole of UBS. Your line is open, Jay. Great. Thank you so much. I'd love to ask about your preliminary 2026 view on sales growth being higher than a typical year, given that, you know, like you just said, you're closing 150 stores. The wholesale business has been on a declining trend. I think, Richard, you mentioned some of the indicators, macro indicators are looking a little bit weaker over the last couple of months. Just tell us, what exactly do you mean by sales growth higher than a typical year? Can you give us a general number or a range? The algorithm to get there, how do you expect to do that? Thank you. Yeah, I don't know if I'm going to be much more specific on it. It's unusual for us to be commenting on the new year on this call. That's more typically the February year-end earnings call. I think I'll stick to that discipline. I will say, though, the reason I commented on it was that we're expecting more of a benefit from pricing because AURs are going to go up and they're going up meaningfully across the assortment. That's what we need to do with a tariff challenge that represents that gross number of plus $200 million. More will be driven by pricing in 2026 and less by units. We do still have some unit growth planned. I think an important macro assumption is that this is an industry issue, that we think everyone in the industry is going to be raising their prices. We don't believe we're going to be an outlier. I think our teams have done a good job maintaining our competitiveness with the market. We have some really good rigor organizationally and process-wise here internally that looks at that common basket of goods to make sure that we're not out of bounds with our primary competitors, where she's shopping most typically. We don't want to have that spread widen out. That tends to be when our business has dropped off a bit. We're assuming that we're swimming in the same pool with everyone else, that everyone else is raising their prices. More of the revenue gains next year will be driven by price than units. Okay, I understand. Richard, that's helpful. Maybe, Doug, if I can ask you just one question. On the right-sizing organization initiatives, you're talking about meaningful reduction in enforcement, office-based roles, disciplined spending management across the organization. The company historically has always been pretty tight on controlling SG&A. How do you get comfortable that you can drive these savings and be able to offset the cost of tariffs, but not necessarily lose something important in terms of the company's operational ability and just the ability to execute and serve the consumer the way you want and the way the brand wants to? Yeah, thanks, Jay. There are really two things happening there. The first one is the one you called out. We're trying to take cost out of the business and have a meaningful impact on our near-term profitability. That's happening. The part you didn't mention that is equally important to me is to take complexity out of our system. We simply need fewer people having greater ownership and accountability for us to get where we need to be. Clear ownership in the most important processes across the most important growth vectors for our business, and then accountability on the results of those opportunities is really how we are going to show up going forward. Yes, cost savings, important part, but removing complexity and fewer people with greater ownership and accountability are equally important here. Got it. Understood. Very helpful. Thank you. Thank you. Our next question will be coming from Ike Boruchow of Wells Fargo. Your line is open. Hey everyone, thanks for the question. A couple from me. First, quick clarification. On the Q4, the wholesale down low single, is that with, you guys do have an extra week just to clarify that. Is that with the extra week? If so, what's the organic number? That's correct. The 53rd week is worth about $30 million in total. Okay. Is that split pretty evenly between wholesale and retail? We will dig that up for you, Ike. I don't know off the top of my head, but we certainly will dig that up for you. Okay. On the store closure plan, just for round numbers, are you effectively saying that you expect to end next year in the U.S. with roughly 700 stores and then roughly 650 stores in the out year? I just know you've been opening a few and you're talking about maybe a few more openings. I'm just trying to make sure I know what the number is going to be going to. Yeah, I think that's directionally correct, Ike. Okay. The Simple Joys, I think Kelly had asked about it. Is there any way you could kind of just give us a little bit more detail there? What's the size of it today? It sounds like you're kind of saying you expect to replace it with your core branded business. Is there any more detail you can give us on the sizing and is that a headwind? I mean, you called it out as a headwind in 3Q and 4Q. Is that a headwind we should be expecting to kind of continue into next year? Just any more detail there? Yeah, I don't want to comment too much. It's unusual for us to comment on individual wholesale customer relationships, and we certainly go to some lengths not to size those. As I said, it is the smallest part of the exclusive brands, which in total represent about half of our wholesale segment sales. It is a bit of a drag on revenue. We called it out because it was material enough to the segment results and to the company results to do so. It will be a bit of a drag, I would think, into next year, but I think we're excited about the opportunity of what the core brands could mean on the Amazon platform over time. It's a bigger opportunity. Our own brands are a bigger opportunity than what we're winding down with Simple Joys, is how I would answer the question. Got it. Understood. Just the last one for me. I know Jay tried to talk about the top line, and I appreciate, Richard, you don't want to go there. If we just leave top line aside, could you help me understand a little bit better? You've laid out the productivity initiatives, which makes sense in our material, so roughly $45 million. The tariff headwind on the wraparound is decently more than that. You're also saying you want to invest in demand creation, and you also lose a week, and there's some other little things in there. I guess just where's the confidence coming from that you guys have to call out earnings growth into next year? It seems like you've got the right strategies in place. It just seems like you still have more pressure coming next year to kind of deal with. I don't know if there's anything else you could share to help us understand where the confidence comes from. Yeah, I would say a couple of things in response, Ike. One, we are seeing some progress and some acceptance from the consumer in raising prices. That needs to be a key element. There needs to be more of that that happens in 2026 to cover the bigger gross tariff exposure. We are assuming that we have success in raising prices and the consumer broadly accepts that without tremendous pushback. I would say also we are expecting the benefit of the productivity initiatives, and we're also assuming good return from the marketing investments as well, the demand creation investments. We've seen some of those proof points start to come through our business. Some of the work we've done over the last number of months have indicated we clearly under-index the peers relative to what we spend on marketing. We've been stepping into that, I think, with some good returns. We are expecting to see more of that. We think that marketing investment actually is accretive to the top line and bottom line next year. You put all that together with the productivity savings, with the ability to cover most, not all, but a good portion of those gross tariff exposures, that leads to positive growth in operating income. Just to follow up on your question on the 53rd week, it's worth about $5 million at wholesale. Okay, great. Thank you so much. You're welcome. Thank you. Our next question will be coming from Christopher Nardone of Bank of America. Your line is open, Chris. Thank you, guys. Good morning. Just a couple of follow-up questions. Going back to the sales growth expectation for next year, is there anything different in your business today versus the prior period of price inflation that's giving you more confidence that you can grow sales, both maybe AUR and units? Can you just give us an update where you're seeing from your competition so far? Are they increasing pricing at a similar level? How are you planning for the promotional environment into the holidays? Yeah, I'll just talk about a few reasons to believe in our current business that gives us faith going forward into 2026, Chris. The first thing I would say is that we are seeing growth in our better and best categories of business. That, by nature, is higher AUR business for us. The second thing is that our brands are bringing in more new consumers. Our consumer base is growing as our market share returns. We are seeing a lot of the newness in consumers coming from those younger Gen Z families. There is a lot of opportunity there and reasons to believe our business is getting better there as well. I think it's across our brands too. It's not just Carter's. We're seeing growth in OshKosh B'Gosh. We're seeing growth in Little Planet. We're seeing the launch of our toddler-specific Otter Avenue brand growing as well. There are meaningful growth vectors across our brands, across ages, across product categories. In those better best buckets, bringing in new consumers on top of that, we believe that bodes well for what's coming down the road in 2026. Richard? Chris, on pricing just in general, I would say we are the market leader, so we intend to exhibit market leadership here. In the past, when we've needed to raise prices because there's been some sort of an external shock to the system, years ago when cotton doubled in price in a fairly short order, we had to raise prices meaningfully. We were able to do so. I would say that the offset could be some loss of unit velocity. That's something that we're continuing to work through. I think our operational, our inventory teams have been really thoughtful where we think we may lose some unit intensity. We're reflecting that in our inventory commitments. On balance, in our retail business where we control more of our destiny, I think we've made a bit more of an investment in units to be able to do the business. There's probably a bit more at wholesale that you would expect that perhaps you could lose a bit of unit velocity there. I think we're being really thoughtful about it. I think, again, this is an industry issue. We're in a lot of the same factories as our wholesale customers. We see their product when we go to visit those vendors. This is not a situation where our cost structure or our supply chain is somehow disadvantaged versus the industry. If anything, I think we have better costs than a lot of our peers in the industry. This is something that everyone is going to have to face. Our intent is to do so thoughtfully and continue to watch our competitiveness, as I mentioned earlier. Those are our plans to raise prices across the assortment. Understood. Thank you. That was very helpful. Just a quick follow-up on margins. I appreciate the intro color for 2026. As we think about the tariff impact maybe into the first half of next year relative to the $25 million- $35 million rates for Q4, should that actually improve as you kind of ratchet up the mitigation, or could that actually be more of a pressure point as you really are baking in the new rates into your inventory for the first half? Sorry to also throw this in, but is there anything else on the gross margin we should be thinking about into next year, even directionally as it relates to labor, cotton costs, freight costs, anything worth calling out directionally? Cotton has been a bit of wind in our sails. It's been remarkably stable and actually down year over year. We're not particularly concerned about cotton inflation. I don't want to be too specific on what we think the net impact will be. I think our teams have done a good job mitigating to date. Here in the second half of the year, it was never our intention to fully cover the cost of tariffs here in the second half of 2025. It was too fluid of a situation. As we approach next year, we've had more time to absorb this. We've had more time to think about reticketing goods, which really hasn't been practical here in the second half of 2025. It's been more of a response in ratcheting back promotional intensity in the business. We have more of a pure kind of ticketing and pricing opportunity next year. It is our intent to cover the vast majority of this incremental tariff impact. Now, it's a bigger gross impact than we had estimated before. That is certainly a challenge. Pricing is a more significant element of it. As Doug Palladini said, there are other things beyond pricing that we're doing with our supply chain team in terms of working with our vendors, moving production. All of those are benefits in terms of reducing that gross tariff impact as well. We're not entirely reliant on pricing to be the only weapon that we have here. It is the most significant. It is the most material, but it's certainly by no means the only thing that we're doing to mitigate the impact here. Thank you. Good luck. Thank you, Chris. Our next question will be coming from Jim Chartier of Monness, Crespi & Hardt. Your line is open. Hi, thanks for taking my questions. Could you just let us know what is the gross impact from tariffs in fourth quarter? Estimated to be about $40 million, Jim. Okay. In terms of October to date, what have you seen with pricing and AUR so far? Yeah, pricing continues to be up so far. We've just closed the month of October. It's up kind of in the high single-digit range from memory. Okay. The expectation is just that the holiday gets more promotional, and the AUR gains are about half of what you did in the third quarter. Is that right? Yeah, I don't know if I'll say half as much. The holiday season is more promotional in general, so I expect we'd give back some of that AUR gain as we get to the more promotional part of the quarter. Okay. Is the tax rate 24% a good number beyond 2025 as well? Yeah, I think that's probably a decent planning assumption. Okay, thank you and best of luck. Thank you, Jim. Our next question will be coming from Paul Kelly of Barclays. Your line is open, Paul. Hey, thanks for taking my question. I'm just curious on the top line. If you're able to speak to the level of incremental price increases you're expecting for the retail channel for the first half, I have a follow-up. For the first half of next year, no, I think probably too soon to comment on that, Paul. Okay. My next question is on the SG&A reductions and the cost savings and the reinvestment. I'm curious if there's anything we need to consider in terms of timing of some of these, of when the savings flow through, when the reinvestment is expected. Also, you spoke to improving returns on kind of the media spend. I'm curious if we can just drill down on that. What are you seeing in terms of the media spend thus far and how is it being spent differently into next year? Thanks. Yeah, on the SG&A savings, I would expect that it's January 1 when we're starting to realize the benefit of the run rate savings that we've articulated. The reduction force will be largely complete by the end of this year. We'll start to get the organizational savings as we move into next year. The offset would be some of the demand creation investments that we articulated. That's about $16 million. That's a full year number for next year. Doug will offer some comments as well, just in terms of the proof points we're seeing around marketing and the returns there. We're going to step our way into it. We're going to continue to measure it rigorously. We're not going to write a check for that full amount the first day. We're going to just make sure it continues to generate the kind of returns that we anticipate. Yeah, in terms of what's going to be different from a demand creation investment perspective, the first thing I would say is that there are two things that we are focusing on: driving traffic to our owned platforms, where we see outstanding results for every point we gain in traffic across our fleet on our website. There's meaningful top and bottom line results. Second, consumer loyalty. That has a lot to do with the experiences that we have on our sites and in our stores, on our apps, with our loyalty program, as well as the stories we tell about our brands and our products. Traditionally, over the past many years, Carter's messaging has been very focused on price and promotion. What you're already seeing is a lot more storytelling around product newness, product innovation, and what each of our brands has to offer, which drives much more affinity and loyalty with consumers as well. We will be tracking very closely against increasing traffic and increasing our resonance with consumers through loyalty. Thank you. Best of luck. Our next question will be coming from Janet Kloppenberg of JJK Research Associates. Your line is open. Thank you very much. Thank you for the detailed repositioning program. I wanted to ask, if I got this right, Richard, your comps are up, and that's being driven by price. Is that against high promotional levels last year, which are not happening this year? In general, yes, Janet. It was the second half of last year that, if you recall, we made a pretty considerable investment in increasing the promotional intensity of the business, also adding some marketing. It was a significant reset in pricing a year ago. We're up against that period this year, which is why we're encouraged by the gains in AUR and the positive comps. You spoke about Amazon. What about your other exclusive brand partners? Are they accepting the price increases as you implement them? I don't know if I'm going to comment specifically on those two customers. I would say we've had very constructive conversations with our wholesale customers, and they certainly are facing the same tariff and cost pressures that we are. Those have been good discussions. It's never easy to raise price in the wholesale channel, but I would say we've got a great level of partnership with all of our wholesale customers. Can you discuss how much your clearance, where your clearance inventories are year over year? I would say on balance, in an improved position year over year, exiting the third quarter. That was an issue a year ago as well, with some of the price that we were taking at retail was to clear through some of, in particular, spring season goods that had carried over into this early fall time period. We did not have that issue this year. I would say inventory balance is much more oriented around current and future seasons than it is past seasons. I think inventory quality is very good at the moment. Doug, you just touched on this a minute ago. Do you think some of this response on a high single-digit price increase, that you know a healthy response from the consumer, is coming from merchandising initiatives? Perhaps you could discuss those for us. Yes, I do. As I talked about, we're seeing our better and best categories perform better as a part of the total mix than they have in the past. Much of that is also being fueled by new consumers coming into the store. We're gaining market share back that has been lost previously, and that is coming through these higher AUR products. As Richard talked about, one of the investments we have made is putting make back in our product. That means our design intent is stronger than it has been in many years, and we believe that trend will continue well into 2026 and beyond. Okay. You're not contemplating any slowdown in the moderate to lower consumer target market that you address? I'm not suggesting you should. I just wondered how you thought about that. We're definitely cognizant of the macro and what's happening in the world. Inflation is real, as Richard mentioned. There are forces that are beyond our control. I can answer for what is within our control, and that's what I just told you. Okay, thank you, and good luck with everything. Thank you. Thank you, Janet. I would now like to turn the call back to Doug for closing remarks. Thank you, everybody, for joining us today. As you can tell, we are making progress against our core initiatives. We are seeing reasons to believe in our business. There remains a tremendous amount of work for us to do, and we look forward to sharing more of that as we move forward. Thank you for being with us today. This concludes today's conference call. Thank you for participating. You may now disconnect.