The company faces risks from consumer spending volatility due to macroeconomic and geopolitical uncertainty. Reduced product supply of certain footwear, declining traffic on digital platforms and in retail stores, and fluctuations in foreign currency exchange rates pose additional challenges. A Belgian customs claim for alleged underpaid duties, with an uncertain resolution, also presents a significant risk. The company is also subject to ongoing IRS audits and potential legal proceedings.
Financial Upside
Increased gross margin, primarily due to lower product costs, warehousing, and logistics costs, and strategic pricing actions, is a positive factor. The company is returning capital to shareholders through share repurchases and dividends. The implementation of a new ERP platform, while presenting some short-term risks, is intended to enhance supply chain and finance capabilities, potentially leading to future efficiency gains.
