Performance in the fourth quarter was driven by outperformance in lead brands, which now represent nearly 60% of Brand Portfolio sales and serve as the primary growth engine.

Market share gains in women's fashion footwear and shoe chains were attributed to an 'edit-and-elevate' strategy, focusing on premium brands and curated assortments.

The Brand Portfolio saw growth in owned e-commerce and international markets, but on an organic basis excluding Stuart Weitzman, total company sales decreased 0.1% as the 1.5% Brand Portfolio growth did not fully offset the 1.2% decline in Famous Footwear.

Operational recovery in the Brand Portfolio was hampered by a 160 basis point impact from tariffs throughout the year, necessitating aggressive mitigation strategies.

Famous Footwear's 'Flair' store format continues to be a key lever for growth, generating a 4.5% sales lift overall and a 6-point lift for recently converted locations.

Management successfully integrated Stuart Weitzman onto company platforms on time and budget, liquidating aged inventory to clear the path for improved specialty retail performance.

The company is leveraging 'centers of expertise' to scale core capabilities in international expansion, e-commerce acceleration, and disciplined costing.

2026 is characterized as a 'build-back year' with modest organic sales growth but meaningful earnings recovery as tariff mitigation and cost-saving measures take hold.

Guidance assumes new tariffs will be enacted to replace prior IEPA tariffs, reflecting a prudent approach to the evolving regulatory and sourcing environment.

The Stuart Weitzman brand is projected to reach breakeven in 2026 following the completion of systems integration and organizational restructuring.

Management anticipates consolidated gross margin expansion of 140 to 180 basis points, primarily driven by Brand Portfolio recovery and favorable brand mix.

The outlook accounts for potential economic slowdowns related to geopolitical conflicts in the Middle East, which currently impacts less than 1% of the total business.

A $25 million liquidation of aged Stuart Weitzman inventory was completed to reset the brand's foundation for higher full-price selling.

The company incurred approximately $2.0 million in remaining Stuart Weitzman acquisition and integration costs expected to impact the first quarter of 2026.

Rising oil prices and geopolitical volatility are flagged as risks that could lead to an economic slowdown, impacting the low end of the guidance range.

A bad debt reserve was fully established for Saks, with management prepared to move forward based on the current wholesale order book despite the disruption.

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Management confirmed they did not ship to Saks for the balance of January and were fully reserved for the $0.06 impact.

Strength in other business areas and better-than-expected tariff impacts in the Brand Portfolio helped offset the bottom-line risk.

Recovery will be driven by tariff mitigation in the Brand Portfolio and margin accretion from the Stuart Weitzman integration.

Famous Footwear margins are expected to remain relatively flat, while the Brand Portfolio benefits from a shift toward higher-margin lead brands.

Brand Portfolio e-commerce remains strong across all four lead brands, while Famous Footwear saw a mixed start to March due to weather and Easter timing.

Early spring performance is being driven by 'newness' in the sandal and fashion categories rather than favorable weather conditions.

Breakeven will be achieved through completed cost-savings, including a January restructuring and moving the brand into the company's distribution centers.

Management expects the brand to eventually mirror the profit margins of the rest of the Brand Portfolio once structural changes are fully realized.

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