VFC - Earnings call transcript Q1 2019

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Operator

Greetings, and welcome to the V.F. Corporation First Quarter Fiscal 2019 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. turn over to Mr. your like now the to conference host I'd Alkire, Relations Investor President V.F. Joe of for Vice Corporation. Please go ahead, sir.

Joe Alkire

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

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

as business 'XX, the and the periods in assets through During results of the Nautica fiscal liabilities Accordingly, this operating including classified held-for-sale has first sale, for of quarter the the business discontinued sale completed all brand business. company of company of date presented. its Nautica the the the operations of brand

results brand Group the plan business, exit divestiture, otherwise sale included all operating in company in presented. continuing completed with VF the executed of on JanSport the fiscal Unless operations the licensing are call licensing collegiate of of quarter for or discontinued XXXX, removed on LSG the the periods During the today's company the the comprises this presented and conjunction results Accordingly, the its business, Sports LSG LSG which based its business of to noted, and Licensed operations. has assets liabilities and business businesses. first

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

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

Steven E. Rendle

you, everyone, our VF's acceleration broad-based our earnings quarter results and morning, brands Joe. continued Thank quarter the were core Good XXXX to the fueled first welcome and for by call. platforms. stronger-than-expected first in

Our remain and we've the with growth progress geographic our The pleased globally increased across I’m year resilient plan, was geopolitical made. that and half balanced channels regions uncertainty. consumers as into despite XXXX

remain and continue continue on to the creation. on commitments organic for for deliver the sustainable, VF we're our to value results. long-term and drivers strategic our to as basis We foundation growth increased at look growth fuel the an results a sharply setting quarter. Revenue Taking focused XX% on position

new quality and look Investor upcoming than Face of the at in out continues The Our all of the Day growth growth long-term in up you in business. Vans Momentum emerging with reach product for a our to in the our we're business. continued renewed clearly North in forward Europe. the next extend importantly XX% and with of brand digital. growth in targets big build performance We families. delivering through circular channels products. improvement chapter across three an generation women's and organic And in growth vision our little to She XX% model. growth led more regions, Boston, a and laid program is quarter, our Investor purchase the performance Vans by grew at brands than the female in launch Direct-to-consumer Mountains growth which year-ago. model brand's new with exceptional brand brand consumers X% lifestyle strong at with XX% growth The than delivered XX% with to double-digit international campaign, women's will business September. China brand a XX% more its of Vans Moves the combined next that focus we contributed piloting outperforming on another updating growth XX% On The brand brand the rate explorers of of strong increased basis, Day in increased our more to XX%

brands. increased quarter all Work growth. delivered driven X% balanced Wrangler Our across X% segment jeans of as growth another increased by And solid nearly finally

Williamson-Dickie the excited confidence to welcomed the In of our in technical working our business. to planet. be movements capabilities May, processes our response strengthen power and cover to and assets. to as the result quality overwhelming. And actively a employees, to We shape well Fueled Reshaping talent of help XX,XXX the our early our our we from deep good. a full-year, align priority. the will In growth evolution corporate raising actions. the A provide quarter. we highlights in communities and and has of sustainable earnings by business are will and globe. brand's and the performance to outlook. leverage We're we're decisions our and unlock integration retain footwear for while of As strong June, the portfolio we're these platform. The for a remain people our to Scott of betterment of attract growth our our few two positively believe help remains both quarter VF principles Icebreaker purpose launched for best formally purpose driven across industry's our moment. our financial been empowering into guiding to increased purpose long-term associates managing revenue purpose our top of collective our force we our for the and our will also will purpose new track, shared lifestyles is for VF's details by and committed and opportunity the in the the high Altra our purpose to as a our and family the active us opportunities commitment the impact on and company, clarity aspirations. Together, with about the

So execute one ability in will plan, our fiscal quarter deliver driven shareholders. confident I on top Scott. for performance and And to I remain strategy growth highly to value and purpose our XXXX our with into our that, creation led, pass it quartile and

Scott A. Roe

Steve. Thanks,

to growth into profitability quarter, and organizational believe portfolio. provide segments reported. segments. our these the reviewing actions I'd segment We realignments, quickly the our our first our light Before cover of reporting In change recent of new of and portfolio to changed like we’ve the greater transparency highlights

presentation Outdoor, each Our at site. We’ve are of Work, Jeans. segments press and brands Active, in the new and We’ve outlined accompanying Web segments earnings included release our our posted in the from historical who also modelers in recovering are our just press change out actions. of fiscal restated included and release. our And information all portfolio there apologies year-end to my again our once

Vans in So growth our in the the XX%, increased was and stronger-than-expected growth moving growth Likewise, broad-based regions building. well organic core Revenue our On to and and X% by and across in channels combined with first our Face big now channels. momentum product XX% an platforms. brands is business driven double-digit all quarter growth brands, basis, regions, Face. three basis, results. and families. a North acceleration remains momentum XX% in brands with balanced geographic On increased North continued led diversified by Vans strong growth is in global The at revenue

XX% more is the than the brand's as strategy the and executes growth on As improving evidenced brand its quality first the growth by wholesale in of quality in Americas.

to efforts pay and confident While reposition off. our beginning still early Face we're are the North elevate that to

So acquisitions, in U.S China. quality and of and than in In rounding by growth strength we're a our led Americas, to better classics. the basis, XX% and in three, balanced, remains growth, big growth out more international. modest Pacific excluding our including Asia business Timberland is the was impact Timberland the the difficulty] increased beginning see double-digit up On XX% in PRO core results delivering [technical both the Europe. delivered improving growth regional robust Europe while of

basis organic growth XX% our wholesale than And partners. increased growth digital. increased was led margin fundamentals and on XX% higher margin increased Gross our XX% XX% organically comps, last with from Our XXX the by lastly, in wholesale points continued over digital growth. gross our basis margins points XX driven by XX% focus year. than business and DXC quality up more Organic core XX.X%, from growth more engines

SG&A revenue XXX an strategic as a double-digit at in As priorities points a of basis points. SG&A declined percentage basis, organic was Investments XX.X%, of rate. percentage prior-year. revenue, versus down basis a our XX increased On

priorities SG&A the continues. offset top full-year an strong than given leverage Strong overall percentage. the in However, leverage our investment in strategic more And our this resulting was line. elsewhere by algorithm decline this for in strength of by the offset

XX% So, was pulling up a $X.XX, including earnings-per-share versus That’s it altogether, last acquisition. contribution year. $X.XX from

of strength first outlook. the confidence are our the in and trajectory Given our business, increased full-year our we raising of quarter

fiscal outlook XX% organic than to of about includes in reflecting to more $XX.X of billion billion, X%. Our range the This the now expected to revenue XXXX following: includes is growth growth be $XX.X XX%. of

FX $XXX relative than from impact outlook prior includes unfavorable updated also Our to negative million the revenue more outlook.

a for the organic FX growth expected growth Active or XX%. full-year, the mid mid than our first revenue to Timberland. increase X% expected low on rate for in than flat have with with to or expected and FX revenue basis due on North International is a to the the change and a By is expected is to impact at is last to Face Work rate to to the expect segment, year. now XX% Revenue just increase material an revenue our XX% half. Global we between at increase on to Outdoor more compared or to to at For second don't revenue to to expected rate. half. be Vans expected XX% basis, least single-digit mentioned. increase no increase more impact outlook XX% X% is an negative in Jeans XX% organic expected single-digit single-digit There's growth now XX% is for about

than expected to business. no increase now XX%, in outlook with now region XX% XX%. growth more XX% XX.X% and XX% the about expected change of to revenue earnings to growth increase margin points for the to Asia-Pacific to international operating there's XX% share range X% margin is increase Gross to XX%, improved basis to be to to to is to Direct-to-consumer in reflecting Adjusted Americas non-U.S XX% to due XX revenue revenue expected $X.XX, European is XX%. the is FX, to is XX% in increase to increase still expected and to now to Excluding expected revenue approximate $X.XX leverage. our is XX% of is SG&A expected expected per digital.

$X.XX rates a included outlook impact negative updated FX from prior the to outlook. Our unfavorable relative

CapEx don't to is impact For $X.X a FX the earnings And finally have full-year, $XXX now expect growth from exceed we billion cash expected with to of rate. material on operations flow million. our

to the So with the start year. strong we to conclude, are pleased

Our confidence is high.

our our across and and We are momentum continues growth core against build executing growth to engines well plan, strategic platforms.

into shareholders. will And with organization. focused on are performance portfolio call We to questions. open and reshaping to remain superior back your committed the VF that, a We for I driven it purpose to and deeply turn delivering the led, operator the transforming returns

Operator

from Please your [Operator first comes Boss you. line Thank with the JPMorgan. Our question. Matthew of question with proceed Instructions]

Matthew Boss

a Congrats quarter, on nice guys. Great.

Scott A. Roe

Thanks, Matt.

Steven E. Rendle

Thank you.

Matthew Boss

half? really your I you on expense maybe front that loaded front, think confidence maybe helpful. of can to and then, expense investments speak drivers Scott, And SG&A to multiyear? you've any the line, now back color how best that the quarter, think in be leverage in end the made the would On about the

Scott A. Roe

the guess, double-digit the probably than the But line same. leverage quarter. you in that the little priorities. year. model, the for in better in Sure, with this think algorithm our saying. talked we've top disproportionate picked guess our here given smallest going year, and quarter. line about from bps in movement implied forward guidance of couple of impact that on is mentioned the the his bottom it's I comments, our strategic did up leverage Matthew. investment change We full-year on that But a And in no top is percentage I how I Steve bit ratios is for the bps, we our what the really and of XX is, been the really actually should quarter little expected on

change. no really really, it's So

You shouldn’t look at this something quarter fundamentally is say and different.

slightly maybe the better We are got, really than but picture what the same. we’ve just remains big

Matthew Boss

And Great. think XX And follow-up X-year guess ceiling the XX.X%, I a multiyear? on XX mix approaching the change the margin plan, margin. gross to any for structural basis then annual as just just we on the benefit? outlook points model with in gross Any the

Scott A. Roe

Yes.

changed we -- in basis take you I just points we margin two you about to year, a the of obviously we should in the way ahead comment. yes, that impact be but think And years we’ve negative. algorithm. confidence XX out, better made and So, that’s behind. in is than This of acquisitions, its that when bps about XX laid haven't mix gross that that the about

So that the gets guidance. XX to to we that referenced the you the that takes bps, in you XX%

they bit have business. with So listen, might. is little we we if better that’s a it's sights I and even better, our in and gross the differently, margin change margin, in get we it for long-term a could earnings it does talked see because in discussion chance that evolve little kind to is for And our to on against here strategic that, key as our that’s And we checkbook think faster it that it what up the we’ve our margins, are growth almost feeling do that We give pattern, might. takeaway about, think internally, line our XX% doesn't it a do that said. little of those I priorities, move investment. and about comes right But operating commitment us every focus a dead But a our if little good is margins. gross a

Matthew Boss

Congrats of luck. Best again.

Scott A. Roe

you. Thank

Steven E. Rendle

you. Thank

Operator

you. Thank

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

Erinn Murphy

here half this Maybe you Great. for into XXXX? Thanks. talked bigger and how you’re you picture, consumer upon just Good into get comment being prepared remarks the America. consumer about morning. guess, in Can resilient. back Steve, North I just just as health with we your feeling of about the you starting the the and expand

Steven E. Rendle

Sure.

more with see that they’re. and this that brands motivated brands that to all we're relevant to we sitting to is think are U.S powerful continues consumer who think I experiences with, have we we and what they last experience a focus our big connect importantly, saying everywhere -- easy seeing products we’re of the here of brands learnings more there's our but the consumers. that really And elevating consumers, connecting for, resilient don’t provide interact clarity product. that look open be we with stand over years on couple to we’re brands, that in that is what and that I bringing brand what emotionally best is the

stay to will our where same Europe, true to drivers money. within opportunity connect and very attention decisions in loyal key spend I relationships. our being those portfolio, really as those their We and focus against and think time the able are same see they maintain and Asia we and platforms we to we to our long-term forefront see continue true the of and the have see that to We in be choose the at they

Erinn Murphy

just love flat, I with Okay. just like understand sounds pretty for And then quarter. pleased on but would know Face, American the Thank better the quality. its the growth it to North North the you. you’re

in about your So as the brand? business in and What maybe speak prepared weighted? more just you entail upon get back expound referenced new that you the does a little circular still you second the then that could into half model half the for And confidence if remarks. bit

Steven E. Rendle

they’re doing Sports, improve thought quality that performance being the offer for the first months XX%, over XX brand so to up clean. piece where with as be, That's the to have that good but of we opened the able is up, to confidence is work paying it Yes, great. what’s sales. Exploration, our such And we've product quarter, right Erinn. I’m this on giving XX new glad to to was North a specifically us commit you Mountain Retailers flat, evolve the quality much and last the wholesale us, the mentioned, to Inventories are the the business Women's. would so validation picked commit across been that this is programs continues Urban as off. Face we buy

are Europe we including here. how of represent and products in Urban those strong ownership. within so apparel. they’re To in over your in online. the continue see, dealers, quantity the giving get we're just we're put Urban And and -- second that we've good they’re We're of floor the the Collections, giving well consumers half, top North well second seeing good footwear -- stores on continue It's consumer as the the placement sell-through its Exploration right best the our We seen, sell-through European focus under opportunity we the move half. confidence. access and and buying the way case the all our we're on own They through that Mountain Sports Mountain evolution products Asia. stronger, of some Series how really the each U.S., product to us good valuing work you that’s into to here resonate us involve, of -- getting we just looking really are renewed question and leadership placement program, end are as confidence consumer, on in they’re that those for Erinn, quality those seeing as getting Steve in Arnie's we that all think the offers about we're Exploration, think doing Face -- the and and bringing the Sports, we Summit to continue over potentially in The to in changing, and work really focus on

model that really the a return and clothing focused sold that worn, quality it either renewed, time we're wash damaged we that inspect was is is of we our on experimentation, piloting to number business the of to consumers refurbishing it get connect to In back been we at us. tune We it the about stay forefront or the and and around. different it, desire case circular when up, agile tests. with it there So, our with it, initially first

but So is the you have the on big the earth. impact same much less difference quality,

exploring significant do way doing our in understanding they brands, our this the piloting is leadership transform. are I explore our results, our in this factor us these across working we giving really with an very be growth a us think teams in for business They the our to and journey for impact of new that And there's is interested should We here brands these have are that not in are but something interesting consumer is future. line very programs. We much corporate to working on think models. new

Scott A. Roe

just North just add put like Erinn, to with yes, around to some on add the of Face numbers part I first sorry on, question here on confidence. your the --

is all, of First through. the really demand showing

the the us the Steve strength order wholesale price and is If visibility full-year said, and is just some at put all so look We’ve growing for behind things when and can you numbers give quality confidence our to down plus those outlook, book the think full-year, the for the this first is the XX% that. interest Also, XX we digital quality, in to the and together at brand. there. see you DXC plus plus is that look at like brand when I quarter, that XX in up

Erinn Murphy

Love number. congrats. you guys Great. Thank the and

Steven E. Rendle

Erinn. Thanks,

Scott A. Roe

Thanks, Erinn.

Operator

you. Thank

with Omar proceed line of the Our Please Evercore comes with next ISI. question. question your Saad from

Omar Saad

Great Thanks, I will congrats morning. my guys. too. Good add quarter.

Scott A. Roe

Omar. Thanks,

Omar Saad

in And about full-year out love first hear It's the you I’d see you’re in kind raising of talk reacceleration Obviously, example strength now guidance the interesting after your a kind and the are to quarter. those of seeing Vans parsing guys, what there discern think using you brands guys technologies engagement consumers is using consumer etcetera. that. between of key business as also and fundamental. product versus creating greater been broad-based you digital of you about really how above driving have you're digital But consumer for for macro to understand broad with help macro your the terms in in And as [indiscernible] effectively and doing you connections what you confidence us is your opposed to the maybe to a of you around way could what's about business or two? kind and stronger excitement think

Scott A. Roe

Yes.

there's shot say really So, will what level last months much macro. to relates at conditions macro about we’ve really macro as the on to going Scott Omar, the much over many haven't changed it this, an brands of I'd our this But about eye consumers, we a that as seen relates I is take more not XX mean, at it our have seen we’re from Obviously, here. I and that now. macro first our keeping consumer much that the on. a change. really less things

basics in And of on a Vans where haven't keeping the multiyear back about and of of of are happening some couple long-standing our baked franchises. or the seeing happening TNF Now to been payoff talking in we going but on the of far our think really kind downside, the big hasn’t been so we’ve a of a a focus sense and payoff. for of what's the geopolitically, years, -- a other we upside where some I the pattern, fundamentals eye at some has you’re some into since -- business things we’re an seeing an is either seen

paying just that’s fundamentals than focus happened on basis. it's on more think a off anything a broader I that’s

Steven E. Rendle

being aspect every really a And in our mindset be diving rolled further continued of about would those most work And portfolio we've out everybody the And, And to thinking consumer focus changing and should talked to Omar, that. for reshape in portfolio March our we're brands consumer forces to it's we most we’ve we year drive in about consumer our narrowed the call our spoke how Boston, our continue in we see connected -- like And brands. to our the we’ve that add forward the our guiding me change. of to company. the in as let as strategy decisions, that putting we long-term the what integrated into done focusing Last can thinking to us of brands important this I at really talk to consumer's when on even we putting our on we on that we of those journey. on we that forefront the mind. portfolio, things

intense is and growth -- of think I it brands, focused our and the to connecting you’re its corporate focus a build our momentum based the functions deeply choices, -- capabilities on So very set focus. stronger help even more brands, that enable of within our building service on starting to see

Scott A. Roe

the just I Omar, factor we’ve other is one actions think right. taken, that’s Yes, here relevant portfolio that

of performance. In see bit terms more little our our platforms improved Work, and that of new tougher at sledding. you're parts factors as we bringing as look that mix to and Icebreaker, as away some on a where growth you of market the Altra disruptive saw And focusing moving think from I shining also such such starting through, the mix

Omar Saad

Got it.

on the side about in of you're also end I Historically, to a technologies could maybe capabilities consumer separate -- of guys, you developing and business. what was what the unique very portfolio. little the you are developing, across focused scalable having and bit functionality, that that especially follow-up So seeing as the the a talk you’re brand company kind facing were think keeping

right to way scalable more seeing about you are portfolio? it? leverage think multiple that evolves, business the areas the the consumer facing in across brands that can you Is opportunities in As

Steven E. Rendle

it. to think about I right the think that Omar, Yes. is way

the the to have those on we leverageable how brands. for would capabilities doing improving really you that you to lesser about is to to in that vertical advancements SKUs lot is focused is files with drive results productively, that consumers and we go-to-market through life there more we're our Vans of to digital making to are speed, important we see I the and a that our starting there. with come That’s examples, thoughtfully could work act platform on within our the focus, in Part consumer so merchandising. don't technology the really this and focused that been work we're how product think the more relationship. always be Timberland tearing and strategy connect our processes results. talk Face integrated certainly to more North strategy, data the one-to-one and of looking through coming use expectation a couple begin bring life o use quality creation on improving going That But to and to and VF see that down

I think our we're just the bring Icebreaker with the can we natural then last very even bringing led our And that in the purpose to fiber was better decision-making just consumer our portfolio, marrying acquisition our That stronger a multiple a in Smartwool attention analytics taking scale do. capabilities for insights Icebreaker connection supply now portfolio to work not that expertise of the we is was beyond acquisition the intentional. in capability and that one and across on consumers. the but with efficiency chain decision-making quality merchandising to to an increased on analytics, and capability and on facing improve what and has been side, strong consumer just insights brands

Omar Saad

you. Thank

Scott A. Roe

the portfolio. we Omar, them call outlined the those are our big, around were that these initiatives strategy, that enterprise-wide think, across leverageable economics and are are I And the in entire

we So are and rest those leverage we drive leverage the -- are of we model. on the the in investment where into those business where that’s And then distorting see directions.

way So works. that’s that the algorithm

Omar Saad

you. Great job. Thank

Steven E. Rendle

Omar. Thanks,

Operator

Thank you.

comes question Please proceed with Vasilescu Group. question. next line Macquarie from of your Our with Laurent the

Laurent Vasilescu

the to for to Vans XX% XX% for growth I to my XH year. low solid would that the Congrats 'XX on results. at really X% taking way to of follow-up channel thanks guide And and grow you for single especially morning on context going the single-digit, those guys single. for guided the wholesale on is right Good guide That XH of high least suggest and of question. wanted double-digit then 'XX, growth full-year then I the we for DXC XX% the to longer-term numbers, forward? do be year's Day, think low think think Investor then about about guided to to the last mix high for Vans but it? with a How

Scott A. Roe

first is part hardest your the again, We high of honestly really I’ve know the it had where big lot of consistently to on of half comping you the business half seen kind thing of predict the this we’re we think Yes, mean, as digits pace of I I is essentially it A said, this DXC really haven't question, numbers. single Laurent, digital the is. area. And is go-to-market right. and business, DXC, slowdown. in of in terms second

at know we that’s it we this haven't at frankly, So although, point, will seen moderate we’re point some that. and

seen that occur yet. haven't We

Steven E. Rendle

would and what Laurent, Omar Vans going active would on is as sorry, lifestyle you is level -- I is what I its provider opinion right mean, I -- I’m our seeking of footwear. top a in now see say, natural

So And exceptional, in bringing has it new teams this we’ve in the growing been XXXX. this management, acquired they’re on products since growth, offers. brand though focused franchise

We been new for with the the really that and that with very more the time consumers are apparel brand good consumers offer the to brand Altra the long choices have seeing new of items range, coming. offers some the a results like and as expands are

to believe their on strategy personally all a his September looking and and in meet brand. can where and forward well-founded a be of disciplined very growth are is hear and Doug understanding managing them Costa what we team driving our long-term that that you approach consumer meeting very strong from this what to Mesa, more is in We resettable that to

Laurent Vasilescu

And XX% helpful. Investor as was key follow-up, Greater that of XX% last organic message Day on year, a and it a the an basis. up China, was then think I Very Okay.

originally for with Anything up this Is fiscal consider China the momentum? case? guys changing grow should guided that year. China teens still for market grow I regards -- high Greater that within to the think we you the Greater

Scott A. Roe

we’re Well, of I guess, little ahead what’s not But point changed guidance. is we our a running long-range this that. are updating at

of that’s We right. so I performance. strength We its nice that that isolate the are on know it's priorities, one in see -- we're we’re really declared one China. encouraged by our seeing though, quarter and wouldn’t -- strategic to that

at updated encouraging, it's yes, range this long we So, but point that haven't outlook.

Steven E. Rendle

point. additional one just Laurent, And

not to attention in beginning for just on of floor working make balanced with Asia better products think we our very store and our thinking platforms the focusing you’re wholesalers, with to at centric those fresh, our more Bailey better on sure like products and a retail seeing leadership of and our with and own focus acting and and web platform, that the through season, greater getting leader the we As offer keep retailer, how marketing. best work new mentality is dynamically the Kevin for our just selling sell-through on we how becoming are

-- in steps is I think proof journey. longer-term early just what a of you’re seeing the

Laurent Vasilescu

Thank very of best and luck. you much

Scott A. Roe

Thanks, Laurent.

Operator

you. Thank

line of with Our comes with Binetti question. Michael Please next question the from Credit Suisse. proceed your

Michael Binetti

Hi, guys.

the to my and me for on work here very a morning add Scott helpful. thanks Let opportunity again. congrats this model It's

Scott A. Roe

quite call into pretty [indiscernible]. deep got We with the

Michael Binetti

[Indiscernible].

you really from for here strong do the like us in of rate I first when the the initial Is year, on take run half. more just questions So It first the margins growth and driving seems digital maybe housekeeping, XX? margin than the couple have a that and really there you're parts. gross guide above the expecting the expected any tow DXC new you models quarter gross annual quickly at keeps for the the moving revenue of gave

Scott A. Roe

and low of out other our retail this it's it's No, and XX% got earnings of we yes, said although quarter right, than it. is a everything early you is relatively

us. scheme early real is of it's encouraging? of of again ahead So in days, Yes, a but lot pretty there's -- it small the estate

Michael Binetti

first us are the mostly we given what quarter. are you last first mind above the guidance for gave with Okay. half metrics thinking Would reorienting time, you

up you was right, first think and I for -- half? the said sorry, it is about XX half XX, think gross the first SG&A in I leveraging

Scott A. Roe

the guess, the we new gave line is half, -- didn't bottom really or reorient Well, Yes. I second this point. we guidance at half didn’t first

the to general, more on and have given is about more you see you’re actuals with of what we year right, So, that the year, going back detail leverage any the shape Michael. margin said haven't really but and the the acceleration unchanged, we that, in half. what is expansion, quarter in beyond Overall, first the

Michael Binetti

about the The playing a ways cycle then, naturally answering there achieving that do post think to sight get and your some growth a our of comp allocations channel across as are question to Fair overcooking look going you say this coverage, through these in growth know spent like a cycle like brands tough these time this those bit these things rates give into Okay. we confidence, we of period that big sure you your are pretty I’d about one say, we risk as of cycles, bit well, into over logo, driven strong earlier we we numbers a things you that your But you comp you we how but as defense the Vans. I’m durable that lot is of tell coverage, there's look things and us I line the retro about the the little is, rate, look or right to little would the isn't very goes we’re natural retro you help a you into less can look -- fashion toolkit about about from as include more aren't that enough. would they’re just good like get on a in maybe long growth compares. cycle the across that that of channel the through and And that a as that at how seems its that managing We have a level brands spoke Can mentioned guys compares. a here. we’re you it this. are hear brand managing tougher guys the very questions, be been they guess, Vans than us fun obviously Vans, think worried like over past confidence,

Steven E. Rendle

Michael, So, let at me take stab that. a

As I VF in Vans has acquired a been rate mid-teen it mentioned since earlier, XXXX. at growing

and And has ownership. operationally not. it how team brand through gets strong more insights very focused stronger gained its each or The brand and the taken stronger, -- who more on its building and manages Vans this have business that growth they our through it from from more our through importantly they growth and that a on as just and they’ve disciplined focus, this trajectory. solid year throughout So and the -- been both financially our strength of consumer consumer, understanding gotten the has are who VF they are

We are distorted seeing exceptional moment growth. in where we're

you trend. resetting that within very could rightful has some the footwear the level wall, assortments do this that are as trend, and we of of relevant channel starting -- way with but tables wholesale section, consumer we the of larger now also just a of brand taken see you channel checks, we penetration and really to in has much can Some we're it, But our the level brand the on the the both look the footprint at place honestly, footwear be as apparel.

So and it that just understand stronger and the how understands segmentation that brand the on thoughtful be time. really disciplined to right management, better its stronger better more this consumer, the this get franchise The begins team right the the of at -- discipline can we management brand is operates. placing channel products

cycle time back moment active a choice. brands the its footwear of rightful component this that a see of This of position likely has reset that as just in exceptional you in top September. You lifestyle when in isn't the is downward one host will of that and we consumer's an the

Michael Binetti

on taking the through. again really Congrats the I in help appreciate quarter.

Steven E. Rendle

Thanks.

Operator

you. Thank

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

Camilo Lyon

fantastic Thanks, we're a congrats about fiscal brands we all of in in guys. to the big three progression And the the and stack them. too year. let kind together my If seeing I think that of start will

are Is North show it to year? now think what to And months? beginning that the think Timberland to the about fact accelerating in the acceleration path suggest that, if Vans on hints of to we XX its be so, do and that the It clues how next year. piece you're next began starting over So fair case last acceleration seems that is is seeing and would puzzle XX the Face this year. about unfolding

Steven E. Rendle

the is what doing good itself characterize this we journey. Camilo, and to Yes, have. is I behind where we business -- way really showing it's Vans in a Today its This really think exceptional. our strength portfolio, diversified are our

core one North most all intensely from bring on last that key Our we've focus up, accelerating. our all we things channel it been these improvement that Face the discipline product level just Timberland powerful talked as of in of better brand, for what look across the areas up to on all imagine we around and regions. the XX categories, to working stronger clean months continued that same brands, of about by same you, just when back the leadership brand functioning at this brands see is this journey are the like would guess, over we portfolio in just time, at their a will these line each I optimum brand time. leave its

Camilo Lyon

mix about Great. into next you right you now? to be that there acceleration year quantify to willing maybe would how way to speak think the Is to a Timberland

Scott A. Roe

you talked long-term we mid and the gave algorithm, about Well, I we think acceleration. growth X X single-digit which is to

Timberland it. haven't that, beyond So we really

go improvement sequential next year. we into expect can as You

Beyond it. that we shaped haven't really

Camilo Lyon

other lie then to them, rank chief exposure in of does China, the fair. kind discussion, contemplating? product that business. in your about if just, to your you it's order the I countries. And ability the your That’s would tariff remiss of kind what not to where of I'd be Okay. didn’t concern is ask if defer this manufacturing of concerns And one are And

Scott A. Roe

here. about weren't Scott start. We will be Yes, wouldn’t asleep concerned it, I if right. we

some this minimis. mean, insight seen we’ve type a watching felt in and the far very so so relatively extraneous very us that guidance is I had all as are things for some of categories, small these accessories there's the far We carefully. other impact. Again, that are

rules. women of the out cost rules chain, and at sometimes once And our beauty the awesome -- what the diverse what -- know diversification chain once adapt have at supply are stuff. we We the good the guys once of supply optimizing diverse landed total figuring we chain its but a quickly. around are, pretty frankly that’s are this know rules the and these of we are can competency very part is they are hardest These the the men supply really and communicated,

I think As anybody's it goes it's right. [indiscernible], to the guess,

It It's rhetoric Of concern. to area gets for just issue depends it. watching us actually the compared on become implemented. the is an could course, where in of an we’re future. It what versus

Camilo Lyon

of a and lot luck forward. going best Thanks guys it. Got

Scott A. Roe

Thanks, Camilo.

Operator

Thank you.

Telsey comes question Dana question. next with Our with proceed the Advisory of Telsey your line from Group. Please

Dana Telsey

business, there put about Good on on you’re morning, of given the seeing there? and are what you seeing can wholesale? feeling are performance. any in just on How on tests you’re Thank on congratulations the Americas? how And talk overseas bit cycles? little What you that performing, they’re update how and new on a give Jeans a And you’ve Can performing you and the terrific us brands and this you. Amazon Wrangler fashion had an everyone Lee you what you're the both seeing? what seeing in some and

Steven E. Rendle

Dana, this is Steve.

understanding very the fit right We have work the to our talked their for question just Seattle, So platform assortments, so and knowledge the us does about account closely how decisions, within the brands marketplace both what with on and we're on we people managing in where now and works best it how working are now representation we environment. that integrated getting dedicating the the deeper them are we how Amazon do can our partner here as of into a Amazon in a past Amazon strategic marketplace, key placing of Europe. team with and in

working the are we’ve -- are been --- We test working that we’re well. on

pleased the are with We results.

the are within a broad that understand are -- Our apparel and and us brands within platform. platform the brands best of jeans how businesses, helping Wrangler some performing spectrum work of really Lee brand Amazon

wholesale, see more not broadly that on wholesale, just we do here … is how only question Your

Dana Telsey

Yes.

Steven E. Rendle

regions? the all in but …

Dana Telsey

trends Order Thank Exactly. division. and Yes. by you.

Steven E. Rendle

Sure.

focused cleaner putting demand see think stronger in much front effectively how sell-through. what market consumers, we the more in on assortments merchandising domestic I the on to I that’s So more and here us of is channel working wholesale drive and think in with a U.S.,

most we it talked the channel, the I cleaner think about its specialty much channel has outdoor than one that been. is

point us place check fresh much in to keep much, inventories that are opportunity much are consumers the that to in new just gives more more flow so product to thoughtful a we using seasonal outlets where excesses. Our really more to move And our our interested. it's

each see within So each we think of improving wholesale one all of really units see by aspects I an on Jeans, you sectors, the think standpoint. business quarter -- better then And the in the one working result. I you it's quarter

I think this was Wrangler's fourth quarter.

Scott A. Roe

consecutive Fourth quarter.

Steven E. Rendle

May there? there of Fourth out quarter improvement. gene a be. cycle consecutive Is going showing on

we to out Lee more Europe to seen the good that expand see slowly, are think in and appropriate I working this is what we've new bottoms we see is extremely very our where as Wrangler these toe in surely in strength the but here strength all but well. category brands itself continue just about show global brand round more Outdoor for really And fundamentally we really our doing Asia importantly in to for starting think some to domestically, in good really of And evolving growth results. sure. is our business begins new offer, -- well to brand lifestyle categories, business a head products improving our brand

Scott A. Roe

stabilization we going back the things do for were in perspective some now this as we’re just on if some about that, coming and that we And seeing go are you think or year modest destocking on more and of channel, off, Yes. of you a growth. even business the us so, see the

we're -- we through give the just that solid foundation look we’ve that and as as really coming us period confidence of forward. on end that So

Dana Telsey

you. Thank

Operator

Thank you.

your line question Please from the of question. proceed with next UBS. with [indiscernible] comes Our

Unidentified Analyst

much. about its that sales you. just you Williamson-Dickie if so you integration. Thank some lifestyle, the Could of the the some that be And Thanks Where Work realized whether identify Have would core talk of Great. helpful. just SG&A into could process? are expansion you synergies? the in maybe or you international drivers,

Scott A. Roe

internationally opportunities of some put Yes, underestimated lifestyle it. we it the because is up in we the about in-country setting acquisition opportunity time probably job and the I seeing excited interesting of are the the even are you and this that at management Asia team of on that at end, lifestyle when a forward. see just start potential frankly, of some areas growth it a see have key that International the nailed done will as that we’re And we pieces business. our going and real former know-how, as you model nice in the our of

-- on and going from your really First the We financially, short been say we well a at answer, question, it's line. integration. was really can't the experience. ahead about integration WD been this organization. really just enough are a done, well. we’re of of Dickie's fit. not of and but The bottom the It's all great little see the a culturally what feeling their been talk it's where point. associates by quality we’re around No, at we really Jay about it's positive We impressed slightly at part going -- its good We’ve

synergies, saw are that we in this the you You deal mentioned are just on but SG&A synergies majority the to and side. there some of synergies remind majority margin SG&A -- the the

of purchasing of That’s and saw we As chain margin. the think benefit we we of and integration the comes where on side said some power gross supply our [indiscernible] it scale manufacturing get the margin business. into when -- the I and side,

Unidentified Analyst

guidance year of those you maybe able working to is make of -- for rest that those implied so improvements the so margin or on type the a gross something then benefits, for the Got situation? of on you’ve sort that more, Scott, already are sort it. those -- been and And being those would are being year in changes of say, next

Scott A. Roe

guidance chain are we another of so some what out. while supply -- -- to see. reflects are we they The And in Yes, let in but way. these a manufacturing put get because lot take said it have a sometimes me also we

said these over couple of we period. So you would year a see

majority in then of in the move you're as could the period But we coming a the we the of of right you'll guidance that margins see this which forward over continuing time. as seeing and as of Some number year. we first rough now -- implied some said in business double

Unidentified Analyst

it. so Great. Got you much. Thank

Scott A. Roe

Yes.

Operator

you. Thank

Wells Ike comes Fargo. with question Boruchow next of the from Please question. with line your Our proceed

Ike Boruchow

Hi. Good morning, everyone.

me congrats Let great Scott. quarter. question first add for probably my to a guess, I

the business you're you the feeling maybe Jeanswear maybe can business to months? Going back to to bigger X and visibility, the about prior mass just the wholesale specifically talk picture how to XX U.S there relative with business,

Scott A. Roe

Yes.

think that. experience think a for a and was that the really as the in We and productivity, we of them and favor on look sets forward And for that move. positively them a consumer, be least move So base. through the I players has that our are to comment in categories, appear of at that back previous of us and others as the think destocking affected, mentioned be we I end a gone We relates there in it through relative work good that there that inventory. applaud good largest positive we the good one are that you on to to with just but business that may

there's -- that in other and is there obviously various space. losers winners Now are that

I be think, look better. to and are there growth relationship sorry areas our that are somewhat with will -- that we've with continue winning been in not maximizing some knowing if and and realistic forward conservative think, I and look our we closures our those you winning we as at -- look and relatively consolidations doing our at and we're guidance, store if customers been fairly, the consumers, you we've forward

We doing cautiously as well. are are that some also working not with

Ike Boruchow

makes totality North of sale for channel U.S as to to of of to then X little understand quality just back the that guess the this a at get in improving year? a channel point X the when And for sense gears I while. from the is from U.S curious, maybe perspective modeling year wholesale switch to that sell-through. to quality, it. and we inflect Should territory? some and initiatives the see for kind Got should Face, question the for we total some to perspective? a Should wholesale in expect negative at stabilize point? positive the -- all kind wholesale U.S And Just North it what’s my trying Face embedded been has the brand the

Scott A. Roe

Yes, growth -- the you will in quality of growth. be you it's see going it's better year And you is will wholesale. reported consider really when even this even see to what that again,

the as overall that way on better. of price obviously that the rate, quality growth puts you is to and but reduce underlying that growth say stock Another pressure rate

overall last low point -- grow that of overall we big when given wholesale think and order several book so to North algorithm, too, expecting we’ve with to about have be the over be would So as visibility an you we what actually we single-digits, brick-and-mortar North our this the inflection America be and Remember if wholesale the true a Face a well from quarters. have seen from standpoint we're that would picture in as down U.S standpoint.

others partners, of growing are like digital component well retail they , through, We the digital wholesale with as Amazon customers. our those as click the and

will we and solid really some partners all time. see of period as again, this great created -- not and trends them we forward with the we marketplace or remember, we as not are there, distinguish they’re driving customers, view of out not look very we important our us they’re well ignoring as and a So, the them where over the grow equal I see to with realistic business and that think we have but it's are to you working

Steven E. Rendle

on would focus on where we’re to add, the key And, it's that at specifically in-store North presentations. deeper -- Face, strong focus the have I wholesale Ike, really able the accounts for

brands, we on And retailers the we very lower this very, There digital on is specific assortments we downs. for a a a The in Sporting across an like Nordstrom, We partners, based excess Moose JD but lot account continues up-and-coming on. Zalando important. you to coming new marketplace got United as positions right We being partners Dick's our On be is strategic talk specialty Europe, to more able Sports. focusing in know in the for basis feel piece the got where you’ve have the But in about key if so those wholesale focus to communities. the place frequent in a particularly that inventory States Europe Amazon better Goods partners, right and like Asos. you global option on us that channels. found confident strong about players we Jaws have integrated basis, and are those also key ups

to brand partner for value in of marketplace. our add and are We right here find the with the U.S assortment to level them excited

who really is understanding merchandising basis how decision-making decisions. accounts understanding really So into are, right what and of those flows integrated of key the around marketplace assortments product that that the the improved are an set just comment

Ike Boruchow

much. helpful. Really so Thanks

Operator

you. Thank

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

Jonathan Komp

growth of the to And to XX% high for Thank accelerated kind on guidance then growth. close first look I I the big the year single digits. know of quarter mid-single the digits in if to past the few you and looks to picture first just if organic be quarters I trending want hi. were in organic Yes, could. I you. the The revenue

embedding of there on perspective? guidance the is organic the So you’re Vans, color growth outside more an for any what year in from

Scott A. Roe

laid all of Well, I top in we our rates the growth think out brands.

small are. our as quarter can the what acceleration So half the with quarter. Obviously, did see half first guidance relatively in said little the on a Steve bit a you assumptions better we in albeit, our beginning growth first implies slower second at very

one So we at. this at a -- should better, little might. quarter end we’re where we this is that small and quarter But do a point is

guidance we organic So is than -- greater I top our specifically is think line said X%. what organic

and single top in single-digits. the mid here we digits [indiscernible] So the said mid

Jonathan Komp

looking there there's is when within or vision Active kind that and reclassification question reshaping, additional look regrouping. portfolio segment seven much that of that you've included, And how around brands backward category, maybe then of Athletic Okay, Active especially since today. a but segment a might want or picture the how great. big I already more for of based much the maybe traditional taken of that And grouping. I kind segment, brands be based Vans any lack to broader actions on forward are at on ask the dominates kind

So any looking you’ve backward versus on the of kind done? what color motivations forward-looking

Scott A. Roe

in on guidance even argue to get too and what caution much prognosticate to not, would I you or segments. logical they’re based always could our pretty Yes, not whether they’re are clear but The rules you the they’re.

the we justification pretty the straightforward. it's for So -- think new segments I

driver so of given guidance two Our like the Outdoor large one in than for level as it the it's no Sports the click less characteristics to one can that's at the Action and than see, really the one down that rather giant have that. different business or And financial readers was visibility we has is companies become more having of felt characteristics right. especially grouped together of more some with really segment, you you are good

Jonathan Komp

Thank Understood. you.

Steven E. Rendle

you. Thank

Operator

Thank for Mr. the you. come Rendle back Ladies end comments. I time time closing the will to floor and gentlemen, any this have of questions. turn we at our to allowed for

Steven E. Rendle

everybody you Thank joining us. for Great.

proud the we up. just put We very quarter of are

Our growth broad-based. is

proud are this seeing just that X-year yet of We would us I very and all happy core platforms. we brands very, a acceleration journey another and where But in just quarter that across in journey. remind and is are we’re

look to to are a where driven enterprise with the top to performance our We future. forward led, value shareholders. we're going to Thanks. purpose vision quartile that not-too-distant be confident you long-term our We in against talking delivers

Operator

concludes This teleconference. today’s you. Thank

time. for Thank You your this participation. you may disconnect your lines at

V.F. (VFC) 20 Jul 182019 Q1 Earnings call transcript