Good day, ladies and gentlemen, and welcome to the Levi Strauss & Co's second quarter fiscal 2026 earnings conference call for the period ending May 31st, 2026. All parties will be in a listen-only mode until the question-and-answer session, at which time instructions will follow. This conference call is being recorded and may not be reproduced in whole or in part without written permission from the company. This conference call is being broadcast over the internet, and a replay of the webcast will be accessible for one quarter on the company's website, levistrauss.com. I would now like to turn the call over to Aida Orphan, Vice President of Investor Relations at Levi Strauss & Co. Thank you for joining us on the call today to discuss the results for our second quarter of fiscal 2026. Joining me on today's call are Michelle Gass, our President and CEO, and Harmit Singh, our Chief Financial and Growth Officer. We'd like to remind you that we will be making forward-looking statements based on current expectations, and those statements are subject to certain risks and uncertainties that could cause actual results to differ materially. These risks and uncertainties are detailed in our reports filed with the SEC. We assume no obligation to update any of these forward-looking statements. Additionally, during this call, we will discuss certain non-GAAP financial measures, which are not intended to be a substitute for our GAAP results. Definitions of these measures and reconciliations to their most comparable GAAP measure are included in our earnings release, available on the IR section of our website, investors.levistrauss.com. Please note that Michelle and Harmit will be referencing organic net revenues or constant currency numbers unless otherwise noted, and information provided is based on continuing operations. Finally, this call is being webcast on our IR website, and a replay of this call will be available on the website shortly. Today's call is scheduled for one hour, so please limit yourself to one question at a time to allow others to have their questions addressed. Now, I'd like to turn the call over to Michelle. Thank you. Welcome everyone to today's call. We're pleased to report another strong quarter, with Q2 exceeding expectations across the top and bottom line. These results highlight the strength of our business model, underpinned by the enduring power of our iconic brand, and how we're driving growth across markets, channels, categories, and consumer demographics. The progress we're delivering today is the direct result of the strategic choices we've made to sharpen our focus and unlock the full potential of the Levi's brand, choices that have positioned us to capture our highest return growth opportunities. As we continue to evolve into a DTC-first lifestyle company, we are driving more consistent and faster growth, expanding our addressable market, and improving our profitability. Quarter after quarter, our results demonstrate that our strategies are working and momentum is building. We believe we are still in the early innings of unlocking the full opportunity ahead with more ways to win than ever before. Let's now turn to the details of the quarter. As a reminder, all numbers Harmit and I will reference are on an organic basis. We delivered solid top-line performance this quarter, with organic net revenues up 6%. Our international markets continue to demonstrate strong momentum, led by a 12% increase in Asia, while the U.S. delivered a 6% increase. Our direct-to-consumer business continues to lead our growth, with revenue up 8% and comparable sales up 6% in Q2, delivering our 17th consecutive quarter of comp growth. Global wholesale increased 3%, led by strength in the U.S. wholesale channel. Our evolution into a denim lifestyle brand is enabling us to continue to drive outsized performance in women's, up 11% in the quarter. We further extended our leading market share position in both men's and women's, reflecting the strength of our brand, impactful marketing, and a steady pipeline of product innovation. Importantly, top-line momentum translated into strong bottom-line delivery, with margin expansion and strong earnings growth. On the strength of our performance, we're raising our full-year sales and EPS guidance. Harmit will share more shortly. I'll now walk you through highlights from the quarter in the context of our strategies. Our first strategy is to be brand led, powered by a best-in-class global marketing team that moves with agility and keeps Levi's firmly at the center of culture around the world. In Q2, we continued to build on our global Behind Every Original campaign, following its successful launch at the Super Bowl earlier this year. The campaign features a dynamic mix of cultural voices across music, sport, and fashion, including Doechii, Questlove, and basketball superstar SGA. In line with our strategy to align global campaigns with local relevance, we expanded the talent roster to include top local talent across key markets, including Mexican pop star and actress Belinda and leading Bollywood actress Alia Bhatt. We also activated our collaboration with K-pop superstar and Levi's brand ambassador Rosé through pop-up shops in key Asian markets, reinforcing our focus on growing the women's business in the region. Ahead of the global soccer championship, Levi's launched denim product collaborations with the U.S., Mexico, England, and France football federations. When the soccer championship came to Levi's Stadium in June, our team turned a branding restriction into a viral marketing campaign, demonstrating our ability to operate at the speed of culture through bold, agile execution. This drove the most viewed, shared, and commented post in Levi's history, generating approximately a billion press impressions. Turning to product. As I mentioned earlier, we remain in the early innings of capturing a significant opportunity ahead. Our product engine, rooted in denim, is central to unlocking that growth. For more than 150 years, denim has anchored the global wardrobe, outlasting virtually every trend in fashion. It began as practical workwear and yet has become a global symbol of style and self-expression. Today, the continued trend toward casualization is a structural tailwind fueling denim growth globally. The category is projected to grow mid-single- digits annually through 2030, outpacing the category's historical growth. As the global market share leader in denim, Levi's is uniquely positioned to capture this opportunity. We are accelerating that capture through a steady pipeline of innovation in fits and fabrics. In Q2, our bottoms business grew 6%, driven by strength in core fits, with newness adding incremental momentum. Looser silhouettes continued to deliver solid growth. Our 501 '90s for Her and 501 Loose for Him were key standouts in the quarter, reinforcing both the longevity and relevance of our core icons. We are also seeing continued strength across a range of other silhouettes, including our cinch baggy franchise, wide- leg, and low loose in women's, and relaxed and boot cut in men's. Importantly, our core fits across skinny, slim, boot cut, and straight continue to make up the majority of our bottoms business, reflecting our healthy and diversified bottoms portfolio. Our push into categories beyond denim bottoms has expanded our total addressable market and contributed roughly 1/3 of our top-line growth in the quarter. This reflects our strong progress in expanding our assortment for summer, creating more warm weather head-to-toe offerings for our consumers. We are seeing strength across key summer categories, including lightweight denim, linen shirts, and dresses. Our expanded shorts assortment is also resonating, with the category up 11% in the quarter. In women's, we also saw exceptional strength in seasonal trends, including white denim, which grew 70%. Strong in-store execution is bringing these assortments to life through compelling merchandising, outfitting, and seasonal storytelling. We are making great progress in our evolution into a true head-to-toe denim lifestyle destination. Our tops business remains a meaningful opportunity to expand our total addressable market. In Q2, tops were up 5%, or up 7% when excluding the impact of the European distribution center transition last year. Newer categories like blouses, wovens, sweaters, and polos are driving strong growth, outpacing legacy categories like graphic tees. As these legacy categories continue to mature within our portfolio, we are actively refining how we invest across our traditional and newer styles to maximize the opportunity. We expect the business to accelerate in the second half of the year. Blue Tab continues to gain traction as the most premium expression of our brand. Importantly, Blue Tab is introducing the Levi's brand to a new consumer, and we are already seeing early share gains at the premium end of the category. While still in the early stages, we see significant runway ahead as we scale the business, unlocking a sizable premium segment that remains under-penetrated for Levi's today. Now, shifting to our strategy to become a best-in-class DTC-first retailer. Our global direct-to-consumer business was up 8% in Q2 and comprised 51% of total company revenue in the quarter. Comparable sales were up 6%, underscoring the strength of our retail execution, with gains across key store KPIs, including UPT and AUR. Our continued efforts to premiumize the site experience and elevate our online assortment drove another strong quarter in our e-commerce channel, up 17%. E-com growth was fueled by solid performance across all key metrics, including increased traffic, better conversion, higher UPT and AUR growth as we reduce promotional activity on our site. This business has grown almost 60% over the past three years, yet still only comprises approximately 12% of our overall revenues, remaining under-penetrated versus peers and representing a meaningful opportunity for continued growth. This quarter, we welcomed 3 million new members to our loyalty program, bringing global membership to nearly 50 million. We're continuing to enhance the program through more personalized experiences and leveraging our data to deliver more relevant and connected interactions. Global wholesale was up 3%, reflecting strength across customers in U.S. wholesale. The women's business was a particular standout, and sell-out trends across the U.S. wholesale channel remain healthy. Globally, our wholesale partners are increasingly leaning into our diversified lifestyle assortment, reflecting strong consumer demand and confidence in our broader offerings. Turning to our third strategy, powering the portfolio. While international represents approximately 60% of our business today, we see significant runway ahead, with many markets still early in their growth journey. This quarter, international revenue grew 6%, led by double-digit gains in Asia and Latin America. This year, we celebrate 60 years of the Levi's brand in Mexico, our second-largest market globally and a key contributor to international performance, with Q2 growth of 15%. Supported by strong brand equity, Mexico remains both a meaningful revenue driver and a cultural and strategic hub. Across Latin America, momentum is accelerating with double-digit growth led by Brazil, the Andes, and Colombia. We see continued opportunity to build on this strength through store openings, e-commerce, and wholesale expansion. In Asia, performance was strong across markets, with Q2 growth led by Turkey, Japan, and India. In China, we are beginning to see signs of progress, supported by new leadership and improvements in product and execution. While still early, we're encouraged by a return to growth and improving underlying trends. Signature, our value-focused brand, grew at a low single-digit rate in Q2 and was up 9% for the first half of the year. We expect growth to continue and build through the second half of the year, supported by an expanded lifestyle assortment, including a broader tops offering. Beyond Yoga was up 16%, led by strength in e-commerce. Momentum continues to be fueled by newness and expansion into lifestyle categories, including the launch of a new linen capsule, which quickly became one of the brand's top-selling collections. In closing, this quarter again reinforces the strength of our strategy and the progress we're making. We've sharpened our focus, elevated the Levi's brand, and raised our level of execution, building a stronger and more durable business. While we remain mindful of the external environment, the momentum we're seeing across our strategic priorities gives us confidence in the path ahead. I want to thank our teams around the world for their relentless focus on the consumer and the disciplined execution that continues to drive our results. With that, I'll turn it over to Harmit. Harmit? Thank you, Michelle. Q2 was another strong proof point that our profitable growth algorithm is working. We exceeded expectations on both the top and bottom lines, expanded margins, delivered strong EPS growth, and generated significantly stronger free cash flow. This quarter, once again, reflected the Power of And— growth across wholesale and DTC, the U.S. and international, women's and men's, tops and bottoms units, and AUR. Our recently expanded TAM contributed roughly 1/3 of revenue growth, reinforcing the traction of our denim lifestyle strategy. Improving flow-through remains a priority. Q2 showed clear progress. Gross margin expanded despite pressure from tariffs and disciplined SG&A management converted top-line growth into stronger than expected bottom-line delivery. Given our solid first half performance and business momentum, we are passing the entire Q2 beat and raising our full-year revenue and EPS outlook for the second consecutive quarter. I'll walk you through the details shortly. Before discussing Q2 results, I'll update you on two infrastructure initiatives that support our transformation into a DTC -first lifestyle company. First, an update on our distribution network transformation. We completed the remap of Europe to an omni-channel distribution network at the end of quarter two, consolidating e-commerce fulfillment into our distribution centers in Germany and the U.K. We are seeing benefits in operational efficiency, distribution expense leverage, and profitability in Europe. In the U.S., we remain on track to complete the transition of Hebron, our own distribution center, to Maersk by the beginning of the fourth quarter. The transition has taken longer than planned as we balanced strong demand with the operational shift. As we exit parallel operations and consolidate into the new network, we expect to eliminate duplicative costs, simplify the operating model, and improve inventory and service levels. We also reached a major milestone in our global ERP transformation, migrating Asia and Beyond Yoga onto our new global platform after the successful transition in North America. Europe and the remaining Latin American countries are on track for completion by mid- 2027. Once complete, the company will operate on a single ERP, enabling faster decision making, supporting our DTC- first model, all while creating the foundation to scale AI and automation globally. Moving to our Q2 results. Net revenues increased 8% reported and 6% organic. This is despite a two-point drag from last year's Europe distribution center transition. Gross margin was better than expected and expanded 10 basis points to 62.7%. Lower product costs and pricing actions were tailwinds. Tariffs and foreign exchange were a headwind in the quarter. Adjusted SG&A increased 6.5%, primarily reflecting higher selling expenses and unfavorable foreign exchange. As a percentage of revenue, however, adjusted SG&A leveraged 80 basis points, underscoring the discipline and scalability of our cost structure. As a result, adjusted EBIT margin expanded 70 basis points to 9%, reflecting our ability to convert top-line growth into margin expansion. Adjusted EBIT dollars also grew 18%, much faster than revenue growth. This flow-through drove adjusted diluted EPS of $0.28, ahead of our guidance and represented growth of 27% year-over-year. We ended Q2 with inventory down 7%, with a healthy mix of current products across regions, reflecting stronger inventory management and continued progress in reducing excess and obsolete. For the full-year, we expect inventory dollars to be slightly above last year, but below expected sales growth, positioning us to service back- to- school and holiday demand. Building on a strong Q1 performance, in quarter two, adjusted free cash flow increased nearly 60% year-over-year to $231 million, driven by business momentum and improved working capital. Turning to our capital allocation strategy, our approach remains disciplined and balanced, prioritizing high ROI growth opportunities while returning at least 55%-65% of free cash flow to shareholders through dividends and opportunistic share repurchases. In 2026, our capacity to return capital is even stronger, supported by Dockers sales proceeds and execution of our ASR. Consistent with this commitment, we are increasing our quarter three quarterly dividend by $0.02 to $0.16 per share, double our annual increase over each of the past two years, reflecting confidence in our earnings and free cash flow generation. Now, let's review the key highlights by segment. The Americas delivered 7% growth, with the U.S. up 5% on momentum in both DTC and wholesale. Operating margin declined 40 basis points, driven by the unfavorable impact of tariffs and the favorable impact of cost initiatives and pricing actions. Europe declined 1% in quarter two, reflecting last year's distribution center transition, while first half revenue grew mid-single-digit, consistent with our full- year guidance. Underlying trends remain healthy, with DTC up 7% and strength in key markets, including Germany and the U.K. Q2 operating margin increased nearly 400 basis points to 21.1%, driven by gross margin strength and lower distribution expenses. Looking ahead, we are encouraged by high single-digit wholesale pre-order growth for H2. Asia net revenues increased 12%, fueled by double-digit growth across both DTC and wholesale. Performance was strong across markets as consumers continued to gravitate towards our expanded denim lifestyle assortment. Operating margin was 15%, expanding 350 basis points versus prior year, driven by revenue acceleration, gross margin strength, and SG&A leverage. Now, turning to guidance. Based on our strong first half performance and business momentum, we are raising our full- year outlook. The tariff environment continues to be uncertain. Our updated guidance continues to assume incremental U.S. tariffs on imports from China at a 30% rate and the rest of the world at 20%. Our guidance does not assume any benefit from potential tariff refunds, which are approximately $80 million paid to date. For the full year, we are raising our revenue outlook. Now, expect reported net revenues to increase 7%-7.5% and organic net revenues to be up 5.5%-6%. This assumes foreign exchange is 150 basis point tailwind to sales versus our previous expectation of 100 basis point benefit, all of which has already been realized in H1. Gross margin is now expected to expand approximately 10 basis points to prior year, driven by the structural drivers of our business— higher DTC, women's, and international, along with reduced promotional levels and cost efficiencies. We expect adjusted EBIT margin to be 12% for the full year, a continuation of the sequential margin improvement we've seen over the past several years, while taking proactive decisions to reinvest in the infrastructure investments that I highlighted earlier and net new store openings. We are raising our adjusted diluted EPS expectations by $0.04 to the range of approximately $1.46-$1.52, up from our previous range of $1.42-$1.48. With regards to store openings, we continue to expect to open 50 to 60 net new doors this year, with the majority of net openings weighted to the second half of the year. For quarter three, we expect reported and organic net revenues to be up 4%-5% for the quarter, reflecting no expected benefit from foreign exchange. Gross margin is expected to expand around 10 basis points, versus prior, t o 61.8%, despite a roughly 70 basis points FX headwind. Adjusted EBIT margin leverages approximately 10 basis points to 11.9%. This translates to an adjusted diluted EPS of approximately $0.34-$0.36, which includes a $0.02-$0.03 headwind from a higher tax rate and foreign exchange impacting gross margin. A few comments on the phasing of EBIT margins in the second half. H1 margins adjusted for the Q1 timing of A&P were up 30 basis points. We expect that progression to continue into Q3. The EBIT expansion becomes more pronounced in Q4 as we begin to lap the full impact of tariffs in Q4 last year, less FX pressure on gross margin, the normalization of A&P spending, reduced duplicative distribution costs, and continuing to drive SG&A discipline. The underlying message is consistent— we are converting revenue growth into higher earnings and stronger profitability. As a result, we expect to end the year with adjusted EBIT margins up 60 basis points, continuing our trajectory over the last three years. In closing, our results demonstrate a healthy long-term growth algorithm with mid-single-digit revenue growth, expanding margins, strong earnings acceleration, healthy cash flow, and disciplined capital returns. With a strong first half and positive business trends, we are passing through the Q2 beat and raising our full-year top- line and bottom- line outlook for the second consecutive quarter. We remain confident in our path to $10 billion in revenue and 15% operating margin, supported by an expanded TAM and a clear roadmap for profitable growth. With that, I'll open the line for Q&A. Thank you. The floor is now open for questions. If you have a question, please press star then the numbers one one on your telephone keypad. Due to time constraints, the company requests that you ask only one question. If you have any additional questions, please queue up again. If at any point your question has been answered, you may remove yourself from the queue by pressing star one one again. Please stand by while we compile the Q&A roster. Our first question comes from the line of Laurent Vasilescu of BNP Paribas. Your line is open, Laurent. Good afternoon, Michelle and Harmit. Thanks for taking my questions. I have two questions here. First is on U.S. wholesale. I think you mentioned Signature grew high teens last quarter. I think it was up low single- digits this quarter. Curious to know what you are seeing with the more value-based consumer, and channel overall. The second question is on Europe. Europe DTC grew 7% organically this quarter versus 5% last quarter. DTC is actually accelerating. Curious to know how should we think about European DTC for the third quarter. Are you still confident that Europe as a whole should grow mid-single- digits in the second half with pre-books still up high single- digits? Thank you very much. Great. Thanks, Laurent, for your questions. I will take the first one on Signature and then pass it over to Harmit on Europe. Overall, we see Signature as an important business for us. It is on the smaller side, about $300 million annually. We do expect it to accelerate in the back half. I do think it is important when we look at this quarter relative to Q1, you take that in total and Signature was up 9% in the first half. We see that in the second half being either high single-digits, low double- digits, and we see a lot of opportunity. It is a solid, resilient business. They are taking a page out of what is called the Levi's Red Tab playbook and really leaning into newness, into lifestyle offerings, and that is resonating. We see opportunity in tops, in the women's business, in particular. In Signature, women's is only 30% of the business, we see an outperformance there with women's, and we expect that to continue. I think to your question on the health of that value-based consumer, we are optimistic there. In fact, I think overall, our consumer is proving to be quite resilient. Signature satisfies an important part of our segmentation strategy on that more value-oriented consumer, but we are seeing health with that consumer, with our core consumer, and even on the premium side of things. With wholesale, you will always see some variations quarter to quarter. It is really important to look at it in the totality. Like I said, 9% first half, and we are expecting that to accelerate in the back half of the year. Then over to Harmit on Europe. Laurent, on Europe. Europe, as you know — given the timing of Dorsten last year, which is the distribution center, which is off to the races, I will talk about it in a second— was up 5% in the first half. That is consistent with our full-year guide. Demand remains strong, and t he business is really driving margin expansion as my remarks reflected. This trend is across most markets. It includes the U.K., Germany, and Italy. If you just take Dorsten, what's the impact of Dorsten in quarter two? It's about 8 percentage points. Europe, instead of -1 percentage point, would've been +7 percentage points. That's fact number one. To your question about DTC, DTC has accelerated in quarter two. Your question about Q3 and Q4, we expect DTC to be mid to high single-digits. I mean, that's the expectation. Wholesale is a big piece of the business, and as you heard from my remarks, our pre-books are up high single-digit, reinforcing confidence in H2 and the full- year outlook. That's our perspective. I just want to spend a minute on profitability. You heard it in the prepared remarks. Our gross margins are up over 300 basis points. Distribution costs are down 100 basis points because the vision of what we're trying to do on distribution is coming to life, and Europe was the first to go at it, and operating margins are up dramatically. I think overall, Europe is in a good spot and, unlike some of the other folks, we're not seeing that. We are ready for the hot weather, warm weather, as Michelle reflected in her remarks. Very helpful. Thank you very much, and best of luck. Thank you. Thank you. Our next question comes from the line of Matthew Boss of JP Morgan. Please go ahead, Matthew. Thanks. Congrats on another nice quarter. Thanks, Matt. Thank you. Two-part question. Michelle, 6% organic revenue growth on top of 9% growth a year ago. Could you speak to areas of strength that you're seeing across categories and elaborate on the expansion in the brand's total addressable market that you cited as tied to the expanded assortment? Harmit, if you could just walk through drivers behind the sequential moderation that you embedded in the back half revenue outlook. I think it's roughly 4% relative to the front half, up roughly 8%. Any change in consumer behavior to date that you've seen across regions, or is this just more taking a prudent outlook? You go ahead. I'll kick it off with what we're seeing to date. I think what's really exciting, Matt, is that we are seeing broad-based growth. We're seeing it across channels, genders, categories, and geographies, and it's a direct reflection of our strategy continuing to fuel that momentum. If you take channel as an example, both DTC and wholesale were again positive in the quarter. As you know, DTC up 8%, wholesale up 3%, and wholesale actually contributed more to the beat, if you will. As expected, we expect DTC to be that outperformer as we continue to have a lot of runway there. If you take gender, again, fantastic quarter on women's, up 11%, double- digit again, with a steady growth in the men's business, which is highly mature. It's worth mentioning on men's and women's, I did mention it in my prepared remarks, number one market share position and gaining share. This is on the bottoms business, not even speaking to our expanded addressable market. We're really pleased with that category. A gain, we saw growth in both tops and bottoms. Bottoms up 6%. Tops up 5%, but we were impacted by this Europe Dorsten distribution shift, so it was actually up 7%. I think what's really great on both fronts is that we're seeing innovation fuel the growth on both tops and bottoms. On bottoms, while we have a solid business in more traditional fits, we're seeing loose, baggy new fabrications drive momentum. Tops, we're seeing outperformance in these newer categories that really complete the head-to-toe outfitting. Blouses, button-downs, polos, sweaters, all outperforming. Then geographies. Again, very exciting. U.S. market up 6% overall, looking at all of our brands, Levi's and Beyond Yoga. Even Levi's very solid, up 5%, up 6% international, with a big outperformance on the Asia side, as you heard, 12%. This is the kind of report we like to share because it's all working. It really does speak to— in this chapter of Levi's, where we're really leaning into head-to-toe denim lifestyle— and you mentioned it, our expanded TAM is significant. We're going from playing in the denim bottoms business to apparel with a very focused view on what fits in our vision of head-to-toe denim lifestyle. I think the team's doing a great job, and we've got a lot of upside, and as we sit here today, the consumer is responding, and we have more ways to win than we've ever had. I think there was two parts to the second question. What's the moderation— is it prudent and conservative? What's the health of the consumer? Let me start with the consumer. Our consumer continues to be resilient, as reflected in another quarter of strong results. It's broad-based across channels, geographies, and categories. You think of the beat, geographically, it came from the U.S. and Asia. Europe was as expected. It came from wholesale and it came from women. Demand is really healthy because 2/3 of our growth is driven by more units, and that's largely the expanded TAM and the under-penetrated areas of women and t ops. That's point one. Second is we are seeing strength across value, core, and premium. Levi's Red Tab, example, grew 5% or 6%. Signature, this is just largely a timing. We expect second half to be strong. Blue Tab is just getting started. That's the first piece. Yes, there is under the umbrella of the macro uncertainty, I think we're feeling good about it. To your question about second half versus first half, it is prudence, it is conservatism. It's probably maybe a couple of points on DTC and maybe little more conservative on wholesale. Our job is to continue to beat as we've done. Take the last seven quarters, Matt. We beat on the top line, we beat on the bottom line. We have raised our guidance for two quarters in a row on a full- year basis. Our perspective is, as Michelle said, we have more ways to win. The Power of And that you've all heard, which is everything seems to be working, is what we hope carries us through the year. Great color. Best of luck. Thank you, Matt. Thanks, Matt. Thank you. Our next question comes from the line of Dana Telsey of Telsey Advisory Group. Please go ahead, Dana. Dana, your line is open. Please make sure your line is unmuted and if you're on speakerphone, if you can- Yes, it was muted. Sorry. Yes. Congratulations, and nice to see the progress, everyone. Thank you. On Beyond Yoga— hi— you mentioned strength in e-commerce. How is Beyond Yoga doing in the stores? What do you see the game plan for that going forward? The marketing has been very effective. You had music last year, a bit of sport this year. How are you thinking about marketing for the back half of the year? Any difference from overseas or by channel or region? Thank you. Fantastic. Okay. I'll take those two questions, Dana. First on Beyond Yoga. We're pleased to continue to see that nice double-digit growth of 16%, high teens again this quarter. That's being driven by a combination of factors. It's product, and really expanding beyond the traditional activewear of say, leggings and tanks, and moving into lifestyle. That's working. They're seeing a lot of consumer resonance with casual pants, travelwear. Linen was a new platform they introduced this summer. It's done fantastic. Tops, sweaters, dresses. That's working. We called out e-commerce because that is the biggest part of the business to date. We are optimistic on the multi-channel approach. Y ou asked about stores. We're in the very early days. We have less than 20 stores, but we're learning a lot, and the newer stores that we're opening are working. There's a new merchandising approach. We're building slightly bigger stores so we can bring the full expression. I would also say in Beyond Yoga's standpoint, men's is an untapped opportunity. As we've been bringing the men's category forward, that consumer's responding. There's a lot that we're excited about in Beyond Yoga. It's still early innings for this brand, but we see a lot of green shoots on the business. That's one. Your second question is on the brand and marketing. I tell you, the marketing team just continues to deliver. Every quarter, there are new ways for us to show up at the center of culture. We do that globally, we do that locally, and we do have unparalleled brand heat around the world. The strength of our brand, it's a massive competitive advantage, and we do keep raising the bar. Most recent example, of course, and still quite topical is around the World Cup. Here at Levi's Stadium, there was an opportunity when our logo got covered. The team saw that opportunity, leaned in, and made that into a big moment for the brand. By turning that on social media, it's our most viewed social media campaign. We're up to a billion press impressions. We even took that through and taken that through our flagship stores around the world and covering logos, and we just launched T-shirts in a matter of weeks. It just shows the power of this culture of being fast and agile and really maximizing the moment. We'll continue to find those type of moments. In addition, this year, we're running our Behind Every Original campaign. We're excited about what that's doing for the business. While that's a global campaign, we're also bringing that local. I think a great example is Rosé, who's a K-pop star, is part of that campaign. We have now developed a collaboration with her in our Asian markets. I think if you were talking to our teams in Asia, they would say that that is absolutely fueling the business, especially with women, by doing pop-ups, the product collaborations, et cetera. The last I would say to this is, we are a brand-led company. It's an important part of our equation in winning, along with product and execution. We will continue to have this be a big part of what we do going forward, but the team's doing an outstanding job. Thank you. Thanks, Dana. Thank you. Our next question comes from the line of Jay Sole of UBS. Your line is open, Jay. Great. Thank you so much. My question's on the ERP implementation. You've made great progress, more progress. It sounds like it's going to be happening through the middle of next year. Can you just talk about when that process is finished, what it unlocks for the company, especially as you continue to move toward this DTC- first led business? W hat kind of impact might it have on margins when t he ERP is implemented at this time with the distribution centers up and running the way you planned? Thank you. I would say, I'm very bullish on this. I was the executive sponsor for a couple of years. When I first joined the company 13 years ago, we had nine ERPs. People said, let's get to one ERP. When I saw the bill, I said, it's too much to spend. Let's work in turning around the business and growing the top line first. That's what we focused on. The fact of the matter is the team's done a phenomenal job. It's a collaborative process. It's not just run by technology. It's business-led, technology-enabled. We're moving from a very disjointed, customized ERP system to a standardized ERP system that's on the cloud. It was important to take it to the cloud versus keeping it on premises. The success of the project, Jay, the way we have defined it— this is something that the board and we partnered— was the following. T his is about unlocking data. It's about ensuring that the users get access to data and get access to data on time and on a regular basis. Example, if you think about our stores or you think about the distribution centers, on a screen on my iPad, I can see the movement of goods happening as they happen. What's the fill rate? What's the service? What's happening in the sales? That was something we were not able to do. Now, we can do North America, we can see what's happening in Asia. To your question of when does this all complete, it probably is slated to complete by middle of 2027. The fact that we've got this far— knock on wood— without any major hiccups is a good thing. The size of the prize is we get there. Y ou all have said when you change your fiscal calendar, at least once we have an ERP, we have the foundation to get that, to at least think through that and make that happen very quickly. That's really how we're thinking, and it really helps us leverage AI because of the data unlock. Got it. Thank you so much. Thanks, Jay. Thanks, Jay. Thank you. Our next question comes from the line of Rick Patel of Raymond James. Your line is open, Rick. Hi, this is Suraj Malhotra on for Rick Patel. Thank you for taking our question. How much were AUR and units up in 2Q? C an you double-click on the AUR drivers as we think about the split between pricing, promotions, and sales mix? Thanks. Sure. The good news is both were up. One of the things that Ray, this wonderful growth officer, h ad I think the sustainable growth is driven, in my humble view— and our humble view as a team— by driving both. Given that we are under-penetrated in the new TAM that Matt asked about, I think driving unit growth will drive market share. As you think of the quarter, 2/3 of the growth was contributed by units and 1/3 by AUR. If you take last quarter, I think is more 50/50. Our expectation for the year is more 50/50. You take 2025, I think it was 2/3 units and 1/3 AUR. What's benefiting the AUR, Suraj, to your question, a couple of things. One is higher mix of full price selling. We are focused on that. Continued growth in DTC because DTC has higher AURs than off sale. Trend in premium offerings like Blue Tab. Blue Tab is at a higher price point than Red Tab. Category expansion in areas like women. Those are broad factors that contribute to AUR growth. I think you should expect to see more of a balance from us between units and AUR. Great. Thank you very much for the color. Thank you. Our next question comes from the line of Ike Boruchow of Wells Fargo. Your line is open, Ike. Hey. How you guys doing? Hey, Michelle. Hey, Harmit. Hey. How you doing? Two questions from me on margin, probably to Harmit. First, on the current quarter, or sorry, the second quarter, revenue's 300 basis points better but op margin only hits the high end of your guide. I'm surprised there wasn't a little bit more flow-through. Could you maybe talk about maybe any puts and takes that happened during the quarter? Harmit, the third quarter guide I get, the implied fourth quarter on margin implies a pretty meaningful step up in expense leverage. I think it's implying margins up 150 basis points -200 basis points, and that's gross margins, kind of similar, 3Q to 4Q, it's all in the expense base. Can you help walk us through what are the moving pieces in SG&A that are so much more scalable when you get to the fourth quarter, maybe versus the third quarter, second quarter? Thanks. Sure. To your question about Q2, yes, you're right, revenue is strong. Gross margins were really strong. Gross margins were up. I think that was despite a slight drag on because of FX. SG&A was up 6.5%, a little more, largely driven by FX. A third of the SG&A increase was contributed by FX. We did lever. You're right, we were on the top end of our range of 8%-9%. We did lever, EBIT expanded 70 basis points. If you think of the first half— because you have this Q1 spend on advertising— and to answer your question, EBIT margins were probably up 30 basis points if you adjust for A&P. In the second half, the EBIT expansion is driven largely by three things. One is volume leverage. Volume in the second half is probably, in dollar terms, as you think about the seasonality between first half and second half, is about 5% more in the second half of the year. That's number one. A&P is, between first half and the second half, Ike, is 0.5 point low, largely because of the Q1 spend. Essentially, this is skewed towards Q4. Q4, you will see A&P lower than a year ago. The distribution expenses, we have announced the closure of Hebron. Notice has been sent, so it's happening. These expenses between H2 and H1 is probably 0.5 point better, and that's again, essentially happening in Q4. If you look at the Q4 P&L, let's say circa it's about 14% EBIT, you go back to 2024, our EBIT margins in Q4 were approximately 14%. The only reason I don't go back to last year is because last year, the impact of tariffs, which is I think a little over 100 basis points, really dragged the EBIT margins. Q4 2024 is a good proxy for Q4 2026. Looking at the different aspects, those are the things that are probably skewing Q4. Does that answer your question, Ike? Because this is an important question you asked. You're saying that the reason why you get so much more scale and the margin could be closer to 14% in the fourth quarter is because there's leverage on the A&P, there's leverage on the distribution, and the tariff roll-off and reversal a little bit? Correct. Are those the main ones? Yes. Those are the three factors. Thank you. You got it spot on. Seasonality was slightly stronger, so you leverage your fixed costs. Those are the four factors, and you captured it. Thank you. Thank you. Our next question comes from the line of Kendall Toscano of Bank of America. Your line is open, Kendall. Hi. Thanks for taking my question. Two questions, actually. The first one is on tariffs. I know last quarter you outlined a benefit of $35 million to COGS and $0.07 to EPS for the full year if lower rates persisted. Curious if any of that benefit did show up in 2Q and what you would expect for the third quarter. I know it's not included in guidance, given that you probably have a bit more visibility into that now. The second question was just on the U.S. DTC transition. You mentioned that taking maybe a bit longer than anticipated, I was wondering if you could elaborate on the timing and magnitude of cost savings that you would expect now versus what you were initially anticipating for 2026. Thanks. Sure. Tariff, I'll break it up into two parts, Kendall, to your question. One is tariff refunds. Of $80 million, we've just started applying because most of our refunds go through the reconciliation process, there's a defined window a week or so ago. We haven't built that internally. We haven't incorporated into our internal results. We are not incorporating it in our guidance. It's substantial. We haven't figured out what to do with it, because that'll depend on the environment and a whole bunch of things. To your question about the $35 million, our guidance, does not assume that. The way it works is, given that our inventory turns are close to two, it takes a while when you bought inventory at a higher cost for that to turn out. Our view is Q2 was marginal. Q3 will be a little bit, if it is, it'll be an upside to our numbers. It's very difficult. The reason we didn't incorporate this is largely because the conversation on tariffs is a little fluid. There's expectation that the tariffs go back closer to the 19%-20% level late July. Rather than give a number and keep changing it, we just thought it prudent to just keep the tariff rates at 30% for China and 20% for the rest of the world. Thank you. To your question on distribution, the distribution costs at the end of H1 were about a 20 basis points benefit. You've seen what's happening in Europe a year and a few months into it. It is largely an omni-channel setup. It is leveraging the P&L as well as really helping us service demand. I think to the question about U.S., the slight delay is, we said we'd start tapering it off, which is looking at closing Hebron towards the beginning of the second half. The demand has been really strong. You can see that from the year's results. Our decision is to start the tapering off as the quarter progresses. Quarter three. Close Hebron by the end of quarter three and move things to our center in Groveport in Ohio. The cost is a couple of million USD, Kendall, not a lot, but it is the right call to ensure that the demand is serviced. The fact that we have given the intent, given notice, is indicative that we're serious about it. Appreciate the color. Thanks. Thank you. Our next question comes from the line of Bob Drbul of BTIG. Your line is open, Bob. Hi. Good afternoon. Hey, Bob. Just wanted to add, the World Cup marketing has been spectacular with the San Francisco Stadium. Great. Thank you, Bob. Same vibe. It's really well done. I guess the two questions that I have is, number one is, when you think about where you guys have brought the Blue Tab business, what have you learned now, as you've expanded it, as you've rolled it out a bit more? I guess the second question, just more higher level is, within the denim category itself, are you seeing any changes to the promotional environment for the category? Yes. Why don't we start with denim category overall. Your specific question around promotional environment, we're obviously staying very close to this, but I think to our remarks earlier, our consumer is proving to be resilient. I think all the newness we're bringing, the value we offer, we're a durable, dependable brand. I think that plays in as well as all the newness and innovation. Even if it gets promotional, we'll always stay close. You heard it, 2/3 of our increase was around unit growth, only a third on pricing. Even pricing, a lot of that is driven around our premiumization strategy, less promo. We had less promo online as an example, more full price selling. We will always stay very close to the market and the consumer, but overall, we're feeling confident and hence why we felt good about increasing our guide for the balance of the year. I would also say, by the way, as it relates to the denim category overall, historically, this has been a pretty stable category. It's been part of the wardrobe staple for hundreds of years, as long as we've been around, and we invented it. There are times where you get fluctuations and changes in fits and styles. We drive a lot of that, and it's fueling the growth. I think what's really exciting is that if you look out— well, first of all, the denim category has been growing, number one. Number two, we're gaining share. Number three, it's expected to grow over the next five years and even outpace apparel. Feeling really good about denim category. Then beyond that, we're making this big pivot to head-to-toe denim lifestyle, which is increasing our addressable market by the tune of 15x. These categories that were newer in like a full assortment of tops, for example, non-denim bottoms, that just presents a ton of runway for us ahead, and it's fueling our growth. I think overall, we're feeling quite bullish on the denim category and how we will play in that market. Your second question on Blue Tab, we're also very optimistic about this. As the denim leader, we should have our fair share of the premium denim segment, and we are significantly under-shared in this category. We're really just getting going, if you think about it. We've had versions of premium denim over time, we've created a complete sub-brand opportunity, what we call denim luxury, which is truly the pinnacle expression of all things Levi's denim at higher levels. We're commanding price points like in bottoms from $200 to $350, truckers and outerwear $250 on up. We love what we're seeing. It was up 40% in the first quarter, up 40% against this quarter. Relatively small business today, there's no reason why this can't be $100 million, $200+ million over time. I would just say stay tuned. The consumer's responding. To your question specifically on what are we learning, I would say, number one, we're learning that it doesn't have to be just denim and denim bottoms. What you will see from us coming out later this year is a much more robust lifestyle assortment in bottoms, in tops, in sweaters, in shirting, et cetera. Stay tuned. Secondly, we're still learning how to merchandise it. Where does it live in the store? How do we create the looks, both in our stores and online. A lot of opportunity. We're optimistic. Thank you. Thanks, Bob. Thank you. Our next question comes from the line of Paul Lejuez of Citi. Your line is open, Paul. Thanks. It's Tracy Kogan filling in for Paul. I just wanted to follow up on the question about quarter-to-date performance. I think you said you're seeing continued momentum quarter-to-date. I wasn't sure if you could clarify. Do you mean it's similar to where it was in 2Q, or is it currently in line with your 4%-5% guidance for the quarter? Thanks. Hello, Tracy. As you know— I have to say this— we don't provide intra-quarter updates. What I can tell you is that the business trend continue to support our third quarter outlook and full-year guidance. We haven't seen any meaningful change in demand. Demand remains healthy, and that's why our expectation is we'll close the year balance between AUR and units. The growth is largely broad-based. I know there's some concern about Europe, that's why I just want to close by saying the pre-booking Europe for the second half is encouraging, and the full sub made single-digit growth for Europe for the year.