VFC - Earnings call transcript Q4 2017

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Operator

Greetings and welcome to the VF Corporation fourth quarter 2017 earnings conference call. At this time all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation.

As a reminder, this conference is being recorded. It is now my pleasure to introduce your host Mr. of President Vice Alkire, Investor Relations. Joe you. Thank

may You begin.

Joe Alkire

terms, expectations Corporation's morning in to filed morning. with call earnings XXXX defined cause represent which noted, welcome actual on because results will today's that otherwise accurately differ the currency the to more VF neutral our are will lead and and referred discussion, that We to fourth detailed this in believe current as based SEC. call. numbers are These forward-looking results underlying and we These Unless of quarter business. be are the issued could adjusted regularly true release statements. subject uncertainties on adjusted press Good neutral operational in make statements amounts and they materially. and Participants we uncertainties to on amounts our currency today's call was documents in use performance

are refer information currency You with useful items neutral may and the excluded the to us be Reconciliations hear amounts adjusted management's identify U.S. provide supplemental of also amounts, view can to which included quantify found and in GAAP to press in this tables GAAP. and all in accordance of measures financial why which release, investors. reported is

for company the has operations in company of held-for-sale and fourth the the as held-for-sale met assets this it the results all During operations Nautica of decision periods criteria. Nautica of business and the the Accordingly, the the that determined brand business and reached and XXXX, quarter to included presented. business discontinued brand sell its classified accounting liabilities discontinued

completed Group, VF LSG, business, which of conjunction the collegiate business. or Licensed of JanSport divestiture, comprises to quarter its brand sale businesses. second licensing the the LSG and the LSG the XXXX, plans In with the its exit executed company During Sports

and these in liabilities quarter businesses, presented. the Contemporary the Contemporary and has of its on for are assets operations. on Brands XXXX, results operations Brands all completed the based the and the company businesses During of removed discontinued the results Accordingly, periods businesses. noted, the licensing call third company included continuing presented sale today's otherwise of Unless operating

Chairman today's and Steve Officer, call Chief Roe. will Financial Scott Joining Executive be VF's me and Officer, Chief on Rendle,

remarks, Following our prepared Steve? the for we'll call open questions.

Steven E. Rendle

Thanks, Joe, and and to XXXX call. welcome good morning, fourth our everyone, earnings quarter

brand. started, get this like we morning decision address the I'd announcement reached Before Nautica that the to to sell we've the

their to as eager definitive next by or top phase consumer organization. and year value X% progress to and growth moves, revenue billion, of on parties I'm becoming meaningful towards X% we While increased I'd XXXX warrant. we with like have through this a conditions engaged actively do not thank are we basis. and update will a creation, into both Nautica agreement, organic the VF, Nautica organization retail-centric employees was In transformational and yet to you to move and its several process, highlighted an purpose-led, dedication and for as for the success. proceed work for hard $XX.X a quartile agile, and XXXX,

and Our at increased direct-to-consumer basis, and on with of combined three increased growth big international XX%, And rate XX% led Europe China, strength brands increased a in X%. grew in Workwear by an X%, digital, business X%. organic our

improved repurchases. a including record a $X.XX, finally, to of VF and accelerate investment return dividends strong, delivered EPS growth. including to increased of returns for XX.X%, our billion And $XXX million drive through cash XXX driver value fundamentals Adjusted basis key to of share total XX% shareholders, strategy $X.X incremental Our and VF. gross our a points margin, as model, remain to about creation X%

distort sold platform LSG committed process buy Icebreaker. digital as our total XX%, and ago. XX% DXC to retail-centric selling capabilities accounted more more growth, of As with reminded revenue. than CEO, of of and made year to being and total a represents we've committed directed million and investing active comp more than we a Williamson-Dickie result, commitments we which brand toward delivered international acquired now in of brands and XX% the the that a growth. focus a one And a We result, I'm as year than to incremental the result, We and delivered international We being for we as at portfolio we acquired of in now Nautica, and agreement And first XX%, we reached committed Williamson-Dickie. we of consumer-centric finally, total grew consolidated growth and global and committed managers consumer back as I to XX% more work of our representing reflect organization on including a and We a investment wholesale revenue. result, to our committed on majority into $XXX are owned my as digital a strategy. investments XX% platform Workwear and our as X% DXC enable an result, growth, and we single we to

and As build we planet. commitment good will stewards deliver XXXX, our on enter as value responsible our and creators, we corporate of momentum early on citizens, our

specifically our include growth efficiency growth on speed-to-market; support of realigned Face Williamson-Dickie and leadership in our accelerate talents integrating have coming and growth of we'll operational and in the global Timberland fund and priorities North Presidents into North strategy for enabling in year work, our capacity protecting most redirected drive our explosive consumer-centric for objectives. focus enable transformation better with large our Vans, VF; brands, Group initiatives. important particular top while increasing To of America; roles we execution Our our growth here to the brands and and growth successfully our reenergizing Icebreaker a the at create and our the strategic the

in global strategy brand and we and to reporting Reshaping number is active very one were each will the single have in one Going Group geographic President forward, responsible portfolio a for be them. XXXX. our choice region the

portfolio to the commitment we metabolic at in to agile, take entire powerful making of value position a vision active as VF's management and like increase work. VF's our ourselves strategically how Reshaping industry To that change a organization moment compete to happening pace accelerated I'd The an recognize and of cement of around are position in is become rate. Our to win, way are effective in creation nimble, the remain top the will is The the rate globe. a and and more top with brands the associates our we we an priority portfolio deliver win. company. evolving quartile to decisions is XXXX. portfolio advantaged returns,

transformation our Our responded in associates its typical early is in agenda fashion. phases, VF but have

and on our and results. determination even a talented is not leadership our to sincere I you drive I and excited offer success the globally. stronger possible teams momentum Our all commitment build know thank of without we're

So in business fourth calls. revenue look our at digital. benefit including increased let's book with Face X%, and X% with XX% from brand, growth Wholesale percentage that, the X%, take during a Beginning direct-to-consumer quarter order point global increased revenue including a performance. X timing the our prior increased discussed The North shift

our of as the below rightful lifestyle several improve While Face back initiatives growth and brand. global was quality the to reposition the premium outdoor to sales The place we brand timing outlook, the North in accelerated the of its

lower alpinist, revenue In and Nuptse David due Americas By the revenue off-price the leading declined inspired light, prime the strategic brand activity, Europe, The the quarter helped promotional Fleece growth improve in investments XX% the LX will was Face fourth impact XX%, of brand. Wholesale the its put Hoodie performance Exploration and up category well was nicely, aggressive create coupled clearly up which XXth was to shift. Timberland, strong of Series in XX%, less in don't The expand influence and a so including marketplace increased its sales, it the unauthorized of halo in the growth X% marking progress through the growth design to very in with Pendleton, iconic as by broader offset the quarter, essential, Series technical Proprius brand's direct-to-consumer, both book the the for accelerated China, latest growth, our the Direct-to-consumer underlying eighth quarter ourselves to position world. Antarctica. of the growth Collection, dealers, excitement marketplace mid-teen impactful, partnerships the growth against decline team and Exploration and growth. timing deepening across to reported with by continued best Supreme, became plan, the The the being addition strong brand almost the of Jacket North advance just athlete buzz brand normalized efforts fast, the athletes brand factors territory release clear Forever investments To The over Proprius Summit particularly building for for the Urban partners. digital. as our XXXX foundational story. in wholesale with positioning strategic the and brand's actions made world's by new region, consecutive in for which Amazon environment, the from of when region. and Asia of tell revenue rate, assortment. The examples and Face attention of increased around new whole order the Nuptse and momentum X%, join revenue region. improve theory to Cryos celebrated impacted with the a results. made a sell-through significant this Urban also designed digital, commitment TNF The anniversary, in Jacket Face drove brand the fall Europe the for XXXX, of for margins context to theory positive progress with in a China XX% product the made, North Black North expedition stronger Collection design new are reflects designed double-digit us in choices to showing LX excluding in These as The this led supported Lama, of our In and the growth and the Vans, During are the range strategic and core campaign, business of to a important saw collaborations Amazon numbers and in and extension. continued cleaning mentioned. the specifically this The is

negative strategy our Asia we're marketplace. The X% It XXXX the in confident including offset and executing of aggressively we previously. to is made driven which Direct-to-consumer digital, inventory revenue the with as managed off a XXXX XX%, and the by the the targets. in in but in wholesale, the more increased elevate decline foundational in investments quarter, North impact is progress discussed increased even brand. pleased a growth our start being Face we early, strong for to are China

to for at fiscal with XXXX, we to line growth to As laid Face Day. Investor in we North The be X% expect look out the range we X% our

highlighted the for Americas culture. quarter brand, icon Vans, Revenue increased all XX%, with to momentum. XXXX world channels, our to the and franchises. XX%. for around by XX%, was Revenue in become Asia delivering of creative Now increased Pacific Vans global Europe growing The broad-based expression regions, strength fastest XX%, across team for and and has youth product the increased global largest grew fourth brand for record remarkable year the the results. Congratulations

than VF's A billion North first XX%, incredible, more and done. including wholesale digital. a call-out The Vans businesses, regional total in nearly DXC team, Vans comp and the growth a increased above growth with job performance which platform. direct-to-consumer well more direct-to-consumer DXC North Our $X America became XX% was XX%, XX% special America both to than

diversity Thing Looking XXXX. at momentum as and fiscal product, we Just sustain the Not of move the our teams' mentality will growth into Vans' strong One

our more than creative to Skool is new to than growth has explosive respect strength assortment stronger to increased in brand For customs are delivered continued than The styles. in great The great merchandising, XX%, been. apparel, heavily disciplined XX%, accessories. brand UltraRange, Old management, in and and perform Vans' ever double-digit more All with Slip-On fuel expression, quarter. increased as increased continued MTE, levels and inventory platform, the shape We're Vans to a investing and almost we Pro Progression quarter, franchises with across of And also planning. Classic continue growth. well. example and the the XXX% footwear footwear Retail it remain inventory Weather

global growth X% from XXXX. including While difficult, revenue as Face performance increased increased expectations, brand. a will Switching In the same double-digit increased more execution shift impacted and confidence disciplined and increased percentage comps Americas Timberland Timberland, X point expected, Vans to of brand North in digital. in the a The be fiscal than Wholesale next benefit track give long XX% growth year consistent X%, will us revenue deliver the brand record book timing direct-to-consumer order the with XX%, that line in X%. including

normalized the declined for book shift. order X% when revenue However, timing

evolve, growth, offset core The the Our increased and book and our SensorFlex by XX% to diversification revenue both strong, Sport with order X business a almost continued double-digit increased continues particularly franchise. benefit in strength XX%, was rate, of the timing PRO footwear Europe, as platforms including non-classic our from strength business. Powertrain In shift. from strategy Timberland percentage quarter, Timberland our to our which generate Aerocore mid-single-digit brand Classic and at performance a in apparel, of softness from increasing point

rate, and direct-to-consumer growth digital. XX% more in both wholesale including double-digit at than Our increased businesses

drive business, Our than collection, men's, more strong Valley, Waterproof double-digit China, collection. and our at partially in Timberland's Winter the in Park, expect at The with SensorFlex brand, growth we by our High-teen offset by Courmayeur performed come powerful driven a continues by softness increased XXXX, had our while lifestyle almost in this Ultimate level in Asia Timberland's women's expectations. X%, Japan. new highlighted was with which and Boot line in region. with was our outsole a was locally direct-to-consumer which well designed to not Goose Parka rates. Eye to growth Radford business offset Venice the with demand, growth campaign in from decline XX% our in increased success wholesale. product we've XX% performance digital, In in by

into against we we Day. fiscal growth. the we at way begin thoughtfully and diversified our are more step XXXX, out our to will sustainable Investor strategy as move executing laid We And into

speed within investments off announced organizational drafting momentum connectivity significant we the more strong the Europe several made Over past to global foster year, and global and brand, and to we've Timberland changes the designed in have market, China.

global X%, and Americas as Europe expected, in Moving with brand, Revenue grew Wrangler wholesale revenue to increased across X%. the direct-to-consumer. X% growth the our increased and business in balanced

in ongoing X% due declined India. weakness Asia to

holiday behind continue While remains success, us the initiatives signs destocking by key XXXX, the expect our early in to we in growth in Jeanswear said, That variability. quarter-to-quarter in business improvement improve. with largely low, the as the customer Wrangler And were and we pleased of for in fiscal U.S. and showing are visibility look is we the the performance to place profitability put to during period. continue brand U.S. the should

across digits. Our strategy department new as and well with core From wrangler.com wholesale a traction deeply increased double perspective, channels, specialty and seeing partners to more such elevate to the consumers. retail, own digital new gain into our we're extend digital brand continues strength our stores as which business, and as

responded and our tier growth Looking Retro to Wrangler and strategic extensions. collaborations at such Wrangler Performance have consumers to Outdoor, Series are well continues opportunities, these product, Peter such designers upper meaningful creating innovations, Max Wrangler as brand drive and with line as in distribution new

Extreme in Motion declined Extreme the offset driven XX% women's. to offset as success denim wholesale. The Americas growth a with softness was single-digit single-digit Comfort and by Lee business was X%, Now was brand, decline direct-to-consumer continued Khakis men's our about revenue in in low high global flat, of Lee by by products growth in

encouraged in are beginning We to by we're business. see women's our improvement the

The Rider continued X%, the women's year. direct-to-consumer improved Sherpa mid-teen this In and in In new growth declined with to results. particularly revenue delivered India. performed distribution Label offset by well wholesale growth ongoing X%, Black part the as in As product Lee Americas balanced in Lee Europe we was and should drive as enter in Asia, in men's mid-teen well was due quarter. China, a Jacket across direct-to-consumer. up decline strong Fusion results in XXXX, and momentum Magma for wholesale, the collections innovation in challenges as expanded business

Williamson-Dickie quarter double-digit Wrangler revenue and an Bulwark, sector X% turning Workwear, least to Red the single-digit as continued Timberland achieved basis, PRO, to RIGGS fundamentals marking high on Kap growth. Now of third accelerate organic and increased growth, at quarter consecutive with been process integration and pro strength has nearly basis, a driven the On by also and growth, since months direct-to-consumer. It's in improved. forma international, a Williamson-Dickie, XX% strong lifestyle, well. we had gone exceptionally five acquired

creation Our for And integration progress. drive I'll our Scott. to our of have worked Williamson-Dickie the am and past come. will with leadership over it more the pleased be turn confident I years value teams platform tirelessly that the couldn't significant VF to the and with and over few Workwear shareholders months, of that, in I acquisition

Scott A. Roe

Steve. Thanks,

than First talked our dispositions, for sincere the you phone We right one of see do plan and in apology we've year-end nowhere on you what our done see more a for all, Investor we strategic been our change. metabolic year updating at Day. those laid we increasing that acquisitions, that about rate, of your you, out to since models, now. the It's almost results

we results, plan, five-year know a few our As be to XXXX on true. things one the into year reflect we

First, quartile our XXXX for transformational top highlighted value has for been by a shareholders. VF, year creation

DXC, acceleration which shareholders. Second, delivering Europe we've investments to to notable our allowed commitments seen accelerate while us Vans in and

our all journey while along as not others, encouraged as far in businesses overall Lastly, by are the progress. we're

and at confidence fact, In us of we where we're expected gives this path. ahead point on we're slightly to time, right in that be the

influenced review our full-year the into quarter items diving reported and that numbers, a fourth Before let's few results.

in business this have see as Nautica, First, decision Nautica the discontinued and you reached results the this and sell Accordingly, accounting provided and during held-for-sale operations release our on We and the brand determined been have prior to last statement the results morning issued full so met outlook operations we it been the of discontinued the we income can press quarter the impact the provided fourth adjusted. criteria. October. periods an excluding on classified

of within result decision, coalition. this Outdoor global a As be will reported Kipling & Action now results Sports

result recorded fourth in the tax $X.XX. an results by The approximate our million $XXX lower comprises rate. a provisional quarter, the charge of over EPS other as quarter offset revaluation of favorable U.S. charge we payable Second, legislation, recent for historical assets years negatively tax $XXX U.S. federal the offshore, net provisional result earnings tax a impacted transition a by which million partially eight items, a of including as deferred generated net fourth next

incurred million expenses expenses negatively Icebreaker pre-tax $XX and about approximately fourth the we acquisition-related Third, EPS with transactions. of These by associated quarter Williamson-Dickie $X.XX. impacted

with will out forward full-year of items that just My excluding our So, let's the and focus results fourth performance. way, review on adjusted going comments quarter the mentioned.

strong, results well $X.X core ahead continues to Revenue build engines. increased Our outlook XX% momentum of to fourth quarter the provided were growth as last billion, we across October. our

Vans our has heavily address globally our a And of just on high-teen your of regarding been the including XX%, of of acquisition, impact led expect this likely the incredible, our momentum. Revenue the benefit and X percentage we to sustainability we're visibility, order through Vans. increased to growth, XX% growth growth The increased during organic based Excluding shift XX% we investing timing mind from half brands a year. by in book the on Vans approximate on combined Vans point an three continued for current performance explosive Williamson-Dickie discussed first behind question growth from revenue fuel calls. basis, the big prior

digital. strength growth organic capabilities by pro basis, with quarter, international led on work compared on across international again more we're broad-based once growth than more sector establish had prior an to by major an in organic XX% driven more fundamentals XX% digital. on in increased platform on seeing a a in XX% increased Wholesale market forma XX%, basis. Vans, increased the across brands basis, in big strong a and and year, continued And basis, driven direct-to-consumer, we and strength improve to further Williamson-Dickie Direct-to-consumer connectivity. than accelerated than every as the On Europe. business Workwear revenue three business, basis, as Our our our and X% strength by XX% achieved highlight Europe including XX% Total more double-digit Europe. an increased remained growth strong, combined And, we XX%. particular direct-to-consumer. growth organic in our growth again XX% increased than China

digital. Our organic XX% direct-to-consumer an led XX% on business basis, increased in by growth

to elevating rate. Our high-teen businesses Sports accounts comp a and rate, point & timing and book a X% benefit generate brick-and-mortar platform a and percentage with high our X including basis, total wholesale low low and mid-teen Action a more International Wholesale on increased at connecting more from strong, continues organic international consumers shift. digital than in double-digit stores, on an direct-to-consumer revenue and our focus at increased deeply returns. wholesale double-digit our the comp Outdoor remained a increasing order XX%. our With investment increased

of as wholesale growth a direct-to-consumer reminder, our plan. XXXX our digital businesses for account Now, and XX% about

strength it's intensely So our by momentum gross fundamentals remain very performance growth, fourth evidenced margin. We basis and year. encouraging from XX to the the strategy. was quality points in continued strong margin of prior pillars our key and focused Gross up the quarter, XX.X% across as in see on

percentage better points management. a continues outlook favorable be full growth revenue direct Williamson-Dickie providing points provided last a quality to Excluding above and expansion basis flexibility margin more acquisition, XX%, we is SG&A and we XXX a price basis than mix margin was result expected the significant was driver a on growth up for heightened focus result of of opportunity initiatives. us, as inventory sell-through, strategic and XX.X%. as our the Gross margin of XXX to value to Gross stronger which gross the in increased October. to invest our

direct-to-consumer, just gross further, we beyond. and breakdown into into $XX increase and And our growth of bit to to creation, investments a drive an driven additional innovation. million revenue SG&A and business stronger-than-expected majority margin reinvested demand the our was back and However, our product in in light the of by performance, XXXX

the increased more fourth higher see the than ago, demand year with to investment. on on return When and investment for core and coupled change investments creation you're to product These and majority fact, to a design tenets innovation, and our quarter, the XX% insights incentive outlook we strategy, million basis, an the February, talent of invested compared in of we are initial In on weaker creation, focused analytics, the $XXX accounted supply last and that in about demand a compensation organic chain beginning XXXX. Relative provided performance SG&A. during our direct-to-consumer, agility, technology. we've the

into are and We VF organization. a digitally-enabled retail-centric more consumer transforming

While this clearly comes adjusted at financial to commitments and Day. long-term a cost XX.X%, in the ability out changes FX. short our term, exceed points impact we point accelerate quarter to Fourth XX our margin laid are from basis or in a at including confident in basis growth our declined Investor operating negative XXX meet

Williamson-Dickie was the acquisition, adjusted XX.X%. Excluding operating margin

EPS P&L, XX% we the $X.XX outlook of $X.XX provided wrap additional up to the October, $X.XX, increased last adjusted to including So above investment.

X%. balance Turning impact increased organic Williamson-Dickie. basis, an including On inventory inventory to our of sheet, the increased XX%,

leverage ratio cash strong of further of end leverage through and reduce to decline at generation us the allowed should half quickly Our first XXXX. our XXXX, the

balance has additional top capacity sheet Our priority. a M&A remains it and for

revenue So the full an organic increased highlight billion, $XX.X to X% or year, X% on basis. briefly to

increased year organic On growth rate in at growth XX%, XXXX a and three X%. big throughout an direct-to-consumer with The increased of international basis, finished accelerate momentum. with strong increased digital, X%. continued XX% and Workwear Our brands to the X%, increased engines combined

the share and increased quality $X.X initial generated an with EPS improvement and top of to to the we last dividends, made provided in line We despite led Adjusted an meaningful gross to incremental X% reshaping almost organic shareholders to range S&P high-end the and cash XXX. fundamentals basis, organic through That's $X.XX, on XX% return. basis an or in a on XXX shareholder the returned XX.X%. of growth point February, X% billion in margin progress of $X.XX intense portfolio, on basis total repurchases Our focus investment. quartile

a So in fiscal our forward-outlook little due year. year-end, to different to is approach this a change our

in as an adjusted EPS FX. expected Adjusted more March increase basis, follows. due expected to $X.X $X.XX, is revenue is quarter organic than changes single-digit XX%, per for to approximate organic to three-month a expect earnings in part transition an high $XXX due Williamson-Dickie. Revenue $X.XX Williamson-Dickie. On is from from ending at to changes XX%, XX%, up expected to million including up basis, in outlook part a contribution we share the in including about to Our On is increase FX. about approximate billion, rate, contribution XXXX

Now, be while for is we we expected until call, April not provide provide Revenue will year fiscal how comments outlook me a let see preliminary also up. $XX.X shaping growth. the and Adjusted than This $X.XX, to more detailed few the our expected double-digit billion, low a high-single-digit the includes up approximately is relative to Williamson-Dickie. XXXX representing from Icebreaker EPS expected This contributions and includes expected growth. representing contributions be from Icebreaker to Williamson-Dickie.

and is momentum high. strong we confidence in So our closing, have

our delivering growth. accelerating Our growth growth and are core double-digit is engines

are profitable are investing we growth fundamentals opportunities. largest in and Our aggressively most our strong, and

transform continue use will momentum our to on our We success VF. and build early to

portfolio look chapter progress our it our you journey. We shareholders. We on back to of the And questions. I'll we'll will continue with and returns to on top next the to reshape to to value-creation and quartile that, forward operator VF's and turn updating take evolve deliver your

Operator

Thank you.

will We any one yourself question, time, interest limit a session. re-queue and to In you one now ask that follow-up, of the question-and-answer conducting additional. be please we for

the comes your Barclays. question. with Our of Chethan proceed from first Mallela Please question with line

Chethan Bhaskaran Mallela

morning. Good Hi.

business. the So Jeanswear about I to wanted ask

in relating, margin at launching when the innovation least more a time part, at you've to think pressure pricing I channel in as cited is difficult. more

future if the you're timeframe and a stabilize for can margins thinking sense that's about maybe and of rebuild, start So to you. how Thank maybe pricing? you provide contingent to on

Scott A. Roe

This take I'll Scott. is Yeah, that. sure.

said Let the set year. that what me context – of just coming some we into

are who been talk the strategic our of and position to contributor a largest in product know did made try we that repositioning not floor some we was more margin a putting You really very defend about into that large from that deleveraging frankly, their make that some putting case. retailer, going to our customer indeed reports – and innovation our others in business through that a It's year. operating to was and largest price, that that, But is decision the and taking indications this key standpoint. the has male decline from NPD without

and think always forward, in bit, margins. They a low-cost as appreciate place, on in I path our forward look we but little expect pricing see going we that, gross we there we're to as the to And you gross that Jeanswear but operating As Jeanswear it. to into you run. to as profitability maintain a not think year, the producer, margins cost over see much is confident deleveraged ability do is rationalization to improvements we long channel, restore in about And we in a going our next into feel margin. plans at on from standpoint, have the can detail pressures go team

Chethan Bhaskaran Mallela

and performance announcement had Great. And then this the in to in morning. on little starting quarters the Nautica you a turn there quick recent more be know just a a follow-up team management new place appeared I relatively to have and positively.

sale. then fit why and a process on proceeds for maybe sell thought business the your this someone elaborate decision And So also, the better priorities can behind to you for else? from the might strategic be the

Steven E. Rendle

Great.

very and So some this doing this hit people work and a management activity. of we we Yes, a something our on a productivity, that's was Scott regular would But the be point lens, is Nautica, a we place there focused thought lens. strategies are was a could we proactive, as not strategic last didn't up not and as be but at financial very not looked this our us point proud reignite more we've holds. there's for to points type we the in continue is touch channel, a to Steve. the core saying, fantastic there good we're at unlock value continuously, all growth. strategic start came our could And They look I'll better and that retail financially. intensely M&A lens, in place first we can evaluating line in aspirations, owner it outlet team action. go-to-market perhaps to product team and specific of did at would our point This But put lenses team early the look building brought we within divesting basis, brand foundation There's I start, we've owner portfolio. a specifically about we year, is one-and-done it to well. driving brands with a profitability. driving of Nautica. finish. of and our What on to a improving in shoring right that where lot the three all Nautica, where necessarily that financial to this It came just talked that by

into to off hats enter really result. driving we the where process sale good a and can putting So our feel position team in in a us confident

Scott A. Roe

I'll follow up.

of I and on were the we think how there was thinking use that. question a about proceeds

deleverage line, the first term. has credit and in priority short our So will be been the in coming our upcoming that and off to the priority get acquisition balance sheet of Icebreaker, and metrics back our the WD

as expect I we have metrics of we in have lot and we in prepared line back remarks, through capacity as improvement noting, said already, those worth though, it's around my seen a to a get we be XXXX. and think I significant

Chethan Bhaskaran Mallela

Perfect, thanks so much.

Operator

Thank you.

with proceed from comes of with Please line your question next Stifel. Our question. the Jim Duffy

James Vincent Duffy

morning. you, good Thank

Steven E. Rendle

Jim. morning, Good

James Vincent Duffy

and a question high-level on have a I preliminary outlook. the XXXX question fiscal then

shift from the you're maybe had that the than divestures, your quickly some mix plan, than have now of wholesale wholesale strong, percent global been some help more acquisitions, with of subtract lighter a the updated in aggregate, as U.S. a us So you into mix and little an direct-to-consumer in U.S. foreshadowed. the Add maybe can you particularly had really international Scott, evolving revenue and as the fiscal five-year picture you enter results expected. is and we bit XXXX?

Scott A. Roe

right at I top So the head, I you're but don't your of my comments. that have on guess general

if and said on change terms continuing we're curve update. give to until margin disruptive of parts I some to I that portfolio, bottom, going growth the where of the the as what more gross we'll say to from and change are, think standpoint. and progress We seeing we top priorities of focus in point, them. guess a see in there. And and back I'd our of starting on distribution come market the in we are mix – rate. you're some our our the the to of quicker, seeing and where a the bell and portfolio seeing we're targets, also you're it margins guess do we trying gross impact we standpoint, from reshape won't to you At away payoff from what long-range direction, relates them were minimize it evolving the an you're

we're And, I we top clean So said follow to on we're at but ahead at my that Jim, point this be, not have of prepared the some up that your question point. of just acknowledging would we'll specifically head. wholesale. we'll that offline come at forward, where up on don't we

James Vincent Duffy

on then it the that you Can the embedded I'm in And and about of outlook. are please? and very seem view, enough, that. contribution unpack Fair does a the underlying Recognizing the fiscal XXXX thinking bit question organic a a that's growth FX preliminary for acquisitions. little assumptions modest

Scott A. Roe

I essentially FX. from XXXX point see maybe plan. like unrealistic. thing is, That's But We Vans, if growth shaping. with we're I'd continued to going XXXX rate. – continue what other as in probably talked at of currency. coming to in quite benefit It's a little came into But as what through guided we we see XXXX points of Vans, that momentum line the going think of you are Yes, looks intact. strong our momentum gave standpoint, say that do a there Vans from would grow this It XXXX and the where So not right is is our in for see some forever. we XXXX. you the are some benefit we with from even to rate stub about guess like I at what we out we to saw our about we out say couple

of seeing XXXX. you're what that's So look forward as you into part

James Vincent Duffy

you. Okay, thank

Steven E. Rendle

Thanks, Jim.

Operator

Thank you.

from comes Piper the question Murphy next question. with Please Erinn proceed your Jaffray. of Our with line

Erinn E. Murphy

on morning. It little The you business. than weaker all had North bit thought. in, thanks. I a we came for Face Great, I question, Steve, a Good obviously, guess

on the I'm the think You XP Amazon you're elaborate outlined what also piece you your for learning from you three growth to then, little curious preliminary more North I gave X% test specific Can about And Face X% fiscal in growth. to a step particular? impacts XXXX. a bit brand there.

trending? help underpinning the where books the it any into around Is what's in how growth think that about next are order estimate. curious of you confidence Just shape Just the that year.

Steven E. Rendle

Great.

and this in accustomed Amazon, entered all that business. off-price, a of me first, about our strong taking Erinn, that in about brand on. that there work of to be strengthening needed shoring just in let saw really are work five we we months them has we with and product are going the and to in with is we've Asia, up done. open test year at we directly. in into But very work we've – some to demand on North back our We the operating we're digital Amazon, part and So work we're our actions on on kind journey become its with the brand internal you partner, and the pretty evolving DXC the looked brand been And how say,\ big confident last honest pulled Specific about rebuilding that where working were of creation, that titled creation, great what foundation done business, specifically a platforms. we has significant also all around Face

the I'll going that a and done X% that's to you as amount and our specific our through. see a DXC. key I globe, with brand you, we design up you're but as the just brand, you're constantly the went attracted color working pinnacle. re-ignition help would really balance the that you stories, understand line I are people us to Series Black and We've in up here platform. now seen really The impact a to, impact what's having we as better, tell and the unauthorized really that direct account us that the team own distribution. around the mentioned shored on it performance giving Urban on a features like Series. the in see Asia, of we've that policing of partner results Summit I particularly into to Summit Series. was Europe environment, in We would in specialty United we're a then some part about collaboratively But in so a the clean across strong of time have prepared coming my European remarks are Exploration really of fall. tell confidence which piece to mirroring resources States, done. the what but bring a Exploration, the dedicated think Urban aspect I a around driven out to in way and of leader are very good X% a big our don't have this to that we've our product work in investing to points proof that and committed in innovation done, you ideas understand them channel, collaborative this We've energy to in dealers, tell of life Amazon around the unlocking seen really and performance, tremendous specific us design, the provider our the ever focus very complete

us The adds here of marketing collaborations we're digital the kind States connections reads growth consumers, piece and to online early brand campaigns, equally strong. X% proof next the X% with year. is the that Our of that for United launch rate as all out another with in getting stating the up But interest go confidently to we just are in point. and

Erinn E. Murphy

that the ask just Thank EPS currency, guide constant Got currency – you if clarification it. is or that And there? $X.XX does you. in Scott, on or can a for including I fiscal XXXX, for just are

Scott A. Roe

all in, Erinn. That's

Erinn E. Murphy

Okay.

Scott A. Roe

the top a little on see included as treated some number too, the made so benefit Nautica stub. that clarify in FX line to just in is a transition just not discontinued do we from And so is operations, comment period, an I in the as earlier, FX a as reminder, standpoint, well. And Nautica

from a As you fiscal of look not really revenue XXXX, much is standpoint. at it factor a

stub So earlier the on were my period related to the comments question.

Erinn E. Murphy

Got you, Thank it. guys.

Scott A. Roe

Erinn. Yeah. Thanks,

Steven E. Rendle

Thanks, Erinn.

Operator

you. Thank

Pretty should question. the with for of And - in design Americas? taking growth Please high-level comes what's think thoughts proceed XXXX, XXXX? Macquarie Macquarie question parse then question. there from Vasilescu can takeaways Good any growth on growth in results that next Our how out Inc. the Vasilescu the and abroad specifically EMEA? you and for Laurent we (USA), driving Can translate marketing for in Are your my to versus morning, any with impressive U.S. thanks Group. EMEA. Laurent driving Capital

Steven E. Rendle

Yeah, can is EMEA your Laurent, of Scott question. kind that. part EMEA, really, unpack one take the second is extremely The doing our the of businesses well. broad-based. of driving what's it's I'll in growth Every

try that we've I have out ideas North Face given exceptional really going the out also but that from our would our We the larger are efforts and to growth on and that Vans, then able businesses. business, we that are incubator Napapijri concept across brand coming call new scale to with to

impacting work not those the we're clarity product, creation. brand and the creative vision just that a doing design, of are how of demand around that's but Some

ideas Napapijri has testing that positive double scale new to to the quarters for a larger show continues and been having business here few impact But strength. where we digits them as more are it's great growing brands. Our importantly, are we

Europe really is So broad-based.

brands and area, Vasilescu extremely our European model. approach partners They're well. Capital only Inc. with of balanced account it's growth key on management, not do productivity, on DXC Laurent our like but our (USA), driving digital really Macquarie own a focused of now platform, the some - to All growth really Zalando, the the

XXXX, any thoughts and versus U.S. XXXX, and fiscal international? high-level Okay, for

Scott A. Roe

in the going of accelerate forward. They're missing I Europe. a an have that weapon made, to the some has the is XXXX Vasilescu (USA), tax even - makes, us momentum, continued Steve Laurent versus point for that platform recovery strength Capital see mentioned we being in beat. do really progress out the not Macquarie always we we Inc. have bigger as business too, the and We'll U.S. profitability But this earlier. growing, and efficient Europe fact see rate, see

then stub sure I is, quarter, to great. last guidance, to then we by quarter's split same follow-up in revenues in Nautica. Icebreaker? this terms question of is are Okay, for the on thing want be And spend question the just the the And excluding were $XXX and million And assume evenly much expecting should EPS? the how a then is, you

Steven E. Rendle

Boy, lot questions, that was Laurent. of a

Scott A. Roe

(USA), Laurent Wow, okay. Vasilescu - Macquarie Capital Inc.

Sorry, guys.

Scott A. Roe

So to part Nautica. again, that first was I related the of think

numbers our we the contribution guidance and So Nautica can you EPS me had Nautica? our Inc. weighting Macquarie all that in is the and revenues of and Laurent the (USA), Capital restated Is were so provided, from find you see Vasilescu historical it excluded a Remind actuals, - that from question. think by materials I evenly you'll that. split quarter,

Scott A. Roe

weighted half DXC More their business. due second to

is (USA), offline a DXC but Laurent part they a because think clean up, of to be tends Vasilescu see that in performance Capital - Inc. I the their that and first second the part big Macquarie half. better relative So again, drag could we to that you'll business, find

very Okay, great. Thank you much.

Scott A. Roe

was or And question Icebreaker? Capital year? what question Macquarie Vasilescu Laurent accretion a the were yeah, thoughts on Any (USA), you – then Yeah. high-level EPS relative the to to? do you a around you question - asking sorry, – on asked for spend much expect Inc. How contribution

Scott A. Roe

Yeah.

point. this the disclosed Icebreaker haven't we at So amount on

about include in you business, it's think $XXX range $XXX business which you that As Smartwool. about total means Merino when our is the million contribution, million

minimal, can Laurent Capital year luck. in accretive you the first accretion much, Vasilescu Thank very but Inc. year Macquarie one. in - be (USA), and you be of As to will it standpoint, going acquisition it's an best of imagine, from

Steven E. Rendle

Thanks.

Operator

you. Thank

question International your Please Poser next with with Susquehanna Sam from comes Group. Our question. proceed

Sam Poser

have you. and the the may come you Good other and North that U.S. like distribution couple I your The to of of to expect think, on a it the to of better is, some One, accounts guys of Is you that I cleaning mentioned that up, way? just now matter the morning. distribution, saw some to in I things. better of you're sort come of is are a when just what it you back Denver, this and Steve, have clarify Face cleaning business, wholesale it starting back because backed off up

Steven E. Rendle

couple of really partners' a put a seen only brand inventory, environments, three only put It's a but That's in own results differently. the those. higher not we all Yes, profitability, last slightly promotional part the we've DXC profitability. also channel we're effort down amount much the seeing our our the back might tighter that characterize quality our to in through the brand not pulling wholesale of of the it years. tremendous but in and within I in onto two to

you buy the specialty hit issue promotional better to say dealers necessarily all been you, dealers have that the on we but their seeing moderate environment is outdoor I we've it brand, I was wasn't offer think their pretty those were honest of our going of would with of, assortments was We're as product our it's much only industry. turn. the that did within the invest us. this, in tell we open part But also about reasons giving and to I marketplace, kind tell some what which broader fair the would that we with weren't

percentage putting you X growth why for confident you exactly think are that takes of saw and today. remain in we kind front to I in pipeline. I of Denver, think energy that out that X it But to time refill is that XXXX all and

Scott A. Roe

it mentioned would activity, to prepared in X you promotional for just points So, off-price, be in normalized around of cleanup X Sam, reductions numbers if lower some Amazon the put you remarks. his that base if higher that, Steve

that underlying So we're the margins. our seeing trend better. is bit really But a in payoff

and really also focusing the to in that's customer long-term key see on You the our our dealer that business. because and growth results, for well, really profitability as our

Sam Poser

ongoing I've investments part gross you forward? tax situation that expect do timing there? going coming improvement? guidance What's business how One, to XXXX, two-and-a-half And margin and States. fiscal more. Exploration, Urban a things the strong preliminary you is your Two, the rate in got of remain for the the where the that foresee is three,

Steven E. Rendle

take to Scott with one. Exploration. but that that love I'll I'd Urban tax Sam, your go I'll answer So, question, let

shops grow. Black Some is today. that of of The here of some to market continue And are China, Japan the and see right so things we the in there'll unlocking aspects really also of of into Urban line the exciting talent Cryos that you'll coming points into global team, right looking consumer is coming really exciting out see parts design and Collection here, some really for of that our leveraging be and in are in, out is but what see U.S. across Asia, Exploration in Series it's the and market, this leveraging distribution time exciting that only just that that And European of the are not the Asia, that some that growth. points, right are things GOLDWIN that of product coming line, coming driving the spend different out understanding offer, in global placing we Europe there's offers you'll are there consumer that the importance partnership tapping of the but product really assortment, what distribution. market, and the the as the not it

Scott A. Roe

your All parts question. right. other of take I'll the

we're moving know remarks. comfortable provisional that prepared make the first complicated So tax question, But tax of answer I really in is talked rate, for on make I to the us? just people's record enough we it's mind, a – and the maybe a because a that provisional I about amounts the parts. lot of guess, mean broader would what reform, lot does

already to is, mind one pretty we thing As rate, ongoing it attractive a relates the to keep had in rate.

Our benefited our really the high-teens very rate. was much and in rate from foreign

U.S. that's starting It's almost it's from foreign earnings. overall increase back Even it's very point the us, business. at Offshore, it you rate. look the from BEAT for bit together, related side, if when and lower provisions, our And though So our the to XX% did tax a – a modest the of us. reform are recorded benefit net all is on to you GILTI an a the domestic getting tax what with actually benefit. to earnings it

So change it really move needle doesn't to modestly but the it long-term much relates beneficial, doesn't is our anything assumptions. as and

cash a deal. the hand, access other to is the big On

ability to So, of that's because for forward, business lot business the now thing. very got that cash a our And just good for a us, to it's repatriate a us, going that easier. is be XX% profitable offshore, going

how As think XX shouldn't XXXX margins expect think it in detail, few about relates not you I to those basis we're There's obviously, to no margin to there's right? So, a mix guidance do about going investments, guidance, gross fiscal continue question but mix. and you points we comments. shaping a that benefits talked expand that reason of on to XX based to about, give

You going that's assume to able should that continue. be to

As We're about first the about create position shareholder it investments it commitments and commitments from apple. plan. our are to gets investing the our the of thinking relates in to And long-term we're is we our Boston. going a of according way important, meet we're that long-term bite are our the marketplace, disruptive very long-range these that plan think we We areas defendable over the to the way about the will serious long term. for advantage is meeting and investments, perspective. we laid said us are We in a a think out

to On our the opportunities also we take roadmaps, opportunities. investment see where advance other those hand, we'll against

is just we line be that time And you front-loaded other leverage forward. housekeeping five-year as WD. see factor said on. as in come, One forget although will investment there will to increases, go will to top more plan, you'll in and long-range goes as a period that continued the the item, start our be investment start more So lesser don't

is next comes margin. year, dilutive WD that to gross in our As

in, to as organic points relative be to you mix some is will really business. the basis year. WD So XX saw my to offset due of this coming the XX There

can year. You the impact for assume next kind impact as similar you a of annualize

Sam Poser

Thank very you much.

Steven E. Rendle

Sam. Thanks,

Scott A. Roe

Sam. Thanks,

Operator

you. Thank

your question question. comes with Canaccord Please Camilo from proceed Lyon next Our Genuity. with

Camilo Lyon

guys. morning, Good Thanks.

Steven E. Rendle

Hey, Camilo.

Camilo Lyon

apples-to-apples the to contextualize your have – a to XXXX Scott, the by just guidance comparison that I would is all fourth the quarter modeling. FY math, Nautica the the been. about what figure to how fiscal versus because trying versus for for color we what provide on my you And more if bit then think XXXX impact does $X.XX out been could, preliminary I'm just guidance? looking little it's what quarter, have

Scott A. Roe

of sitting quarter; $X.XX I've the So is fourth in to revenue. right And about clean here. this up. million got next your about going $XXX Joe to right We're me

can in where the we we're we where see restated going are I think numbers now. restated in were you and – disc-ops, the since

of bit. you're offline take So can that need the we quarter. little want. add you by you think that a up should to by the impact transparent I provided anything get be answer welcome order if that to We in But to if quarter. to that want Joe, you clean everything

Joe Alkire

No, right. that's

Camilo Lyon

the just positioning points. I about on care North then into the of what the all we numbers? So would actions America been, exclude brand, I global guess was X that back X a North the you thinking have it those growth number, think the And Face, comment been? commentary to could've we would on to you to to Okay. rate if were right, what taken improve that said That was if

Joe Alkire

Joe. it's Camilo,

The business, for North primarily North North those America in America. reside impacts So Face

decline So be see, you relative that to number that a up rate. the would X% at mid-single-digit

Camilo Lyon

Got that to brand growth it, perfect. over really the or goes Vans the And has so. my Steve, back year last last exceptional question, and enjoyed the

brand. about You the talked protecting

mean constrict the how it brand to your going to channel? a to we've What to you the deliveries other You DTC, into and Are right? double-digit the into plan manage segment the that channel? overheat. going wholesale talked brands inventory limit does wholesale alluded to channel this some further? like going Are do to, you the not roll not-too-distant so the about maintain that doesn't letting going you're you the rate, past? some across do How to of seen Are you the growth in you over, as styles of

Steven E. Rendle

can Good question, coming see their And I of Camilo. of one UltraRange, series. growth it growth from, in Mountain the In marketplace. We to We seeing but the not where see about the the also my the collections, some platform. growth in into also talked apparel. Customs new prepared see strategic great in approach thing but new the Classics, the accessories, you as we're expansion is comments, from part Vans

brand. into So it's communities drops. new being the having a wholesale with said the the placing the benchmark specific newness, they're a of of direct on and right business stores right on very and looking right how style partners, formats to moving very broad-based balanced with our consumer using of the it they expression but really each an that of but before, mix but those thoughtful focus approach But – frequency partnerships being being different amount our across that the up team the inventory, evolving over-torque, with one premier most points be not play one season. amount at our look forward stores at globe, brand to newness about coming a really we've Vans really product having sell of of keep segmentation not thoughtful, the into, across this have the touch intense with the thing, how amount is we They're

does, we entire So A has of are what for move our the they benchmark business across lot enterprise. learned the Vans team and us.

Camilo Lyon

say to ton to if had is consumer maintain And how your into of new consumer that getting who buying that or brand is. deeper growth buying fair been you're that's that with is opposed incremental understanding you existing as the what do to consumer they do it consumer a work do before? a in Is the that relative what's true, multiple that fact you new guys you dig in How rate? if consumer, driving pairs

Steven E. Rendle

that what things believe of those understanding consumer, a really and our our available. within up consumer and lot that life all to Vans have communications very consumer, being is analytics investments feel sure to and entering and this appropriate able in important them paints of creative mediums in of that area, able evolve being broad-based our collection what consumer for we next data to our specifically offer different individualized digital are conversations, focused a now from to to really what understanding and brand, make through behind bring spend messaging that touch then to we on that to item are new There special being our the science team consumer their to our is that and time is our for able expressor the that the unique product. all platform, and to add data We

Camilo Lyon

much very good Thanks and guys. it, Got luck.

Steven E. Rendle

Thanks, Camilo.

Scott A. Roe

Thank you.

Operator

you. Thank

from Baird. Jonathan of Robert Please final Komp question. with line Our comes question your W. the with proceed

Jonathan R. Komp

about wanted a the about to hi. I Yeah, the fiscal commentary things outlook. XXXX clarify couple

$X.XX. thing just I for said clarify first you to base about know, the Scott, that. wanted I The

$X.XX, to in but of it's think the I that. range I wanted confirm

Scott A. Roe

is you're code. zip $X.XX – right, in you're Yes, the

Jonathan R. Komp

Okay. My the currency which having growth, about I know line Dickies question that you margin will be then targets, your is favorable some but I maybe contribution plus is in think be XX% with would impacts. long-term

So long-term I the below be just the wanted to drill down why growth target. underlying might

Scott A. Roe

number. I is is about look give just come in you contribution year point five-year details. modest And more we right. this XXXX you is actually in, the We're tracking long-term what unpack time we'll into which the is line. a not a in when growth a I give we're underlying one you the Dickies and talked relatively on true impact from exactly this organic back, a growth, everybody remember that's you're we'll top It visibility right period Currency we plan, at overall April. both back But So the when with would plan. in bottom that, are growth, and bit from our right? say point we where ahead, and little where and huge obviously, for would line

So long-term earnings and of what profile, our evolution forward. good guidepost a we view. that expect pretty think about view a think as that both long-term we're taking as will about shaping as making, going what's our really is decisions give you you We're to the the as well that

Jonathan R. Komp

Dickies. on could just if last clarification And I Okay.

I fourth $X.XX added earnings. quarter think attributed or the On in itself, it

had I coming into quarter. said $X.XX think the you

So it what operating over for that if forward. delivery the of benefit that to has some Just clarify domestic implications drove going was was any sort there? tax that and or trying business

Scott A. Roe

very fourth getting fourth confidence It's as materially But a some their than standpoint, it, in good a we forward and our that drove things quicker little a really at quarter, a a had plans, well not it's thought. retail quarter. few little it us costs a but an lot bit actually from really of We and the got as says said little it gives strong overall and They more international we in operating was earlier. different.

Jonathan R. Komp

Thank you. Okay, great.

Operator

for any and end Steve I gentlemen, the we Thank have back Mr. turn to closing Rendle would remarks. you. Ladies to session. of over reached our question-and-answer call like the

Steven E. Rendle

Great. everybody. you, Thank

top recap. a creation for our VF, for coming by shareholders. quick transformational We're year value a quartile off Just highlighted our

our We are encouraged very progress. by

been be. transparent we've think very slightly we with intend drive enterprise. ahead of and where today, And expected open to we we I this we're where and to are where

potential we maximum forward, have achieve As their of elevating creation, our shape portfolio, and around reassured be growth. our with to an move drive intense focus helping brands to brand DXC the leveraging our also on but the demand drive one, we digital, that product, platforms our focus just it, international our and

as an come platforms, digital also for DXC where will We us even and retail-centric. see life consumers, consumer to more our becoming around our enterprise foundational trade as globe. on wholesale across evolving to to better we continue to partner an our investment wholesale this specifically and will our the be own to us accelerate enable We but

capacity on creating to very, shareholder be attentive for our efficiency We will and to continue operational very being growth, while focused delivering intently commitments.

for continue you to We're with being us our thank quarters So conversations come. today. excited in to the

Operator

teleconference. This you. today's concludes Thank

at wonderful your have Thank lines disconnect day. time. a and for You may you participation, your this

Joe Alkire	VF Corp.
Steven E. Rendle	VF Corp.
Scott A. Roe	VF Corp.
Chethan Bhaskaran Mallela	Barclays Capital, Inc.
James Vincent Duffy	Stifel, Nicolaus & Co., Inc.
Erinn E. Murphy	Piper Jaffray & Co.
Laurent Vasilescu	Macquarie Capital (NYSE:USA), Inc.
Sam Poser	Susquehanna Financial Group LLLP
Camilo Lyon	Canaccord Genuity, Inc.
Jonathan R. Komp	Robert W. Baird & Co., Inc.

V.F. (VFC) 16 Feb 182017 Q4 Earnings call transcript