The stock declined 2.8% following Q2 results as margin gains from tariff refunds were offset by elevated logistics costs and substantial investments weighing on operating expenses, leading to mixed investor sentiment despite solid sales growth.
- Net sales increased 12% year-over-year to $347 million, marking the third consecutive quarter of double-digit growth.
- Gross margin improved to 56.6%, boosted by a 160 basis point tailwind from IEEPA tariff refunds; excluding these, margin rose roughly 90 basis points driven by AI-optimized markdowns.
- Operating expenses grew significantly, reflecting strategic investments in long-term initiatives including marketing and development of new product lines and physical retail.
- Elevated logistics costs, especially internationally, impacted profitability due to geopolitical-driven fuel surcharges and freight increases.
- Net income was $19 million and diluted EPS stood at $0.26, benefiting from tariff refunds but facing pressure from higher expenses.
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