VFC - Earnings call transcript Q4 2021

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Operator

Greetings, and welcome to the VF Corporation Fourth Quarter and Full Fiscal Year 2021 Earnings Call. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Mr. Joe Alkire, Vice President of Investor Relations, Corporate Development and Treasury for VF Corporation. Thank you.

begin. may You

Joe Alkire

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

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

Occupational on discontinued are operating Unless has XXXX, for the Occupational on company held-for-sale company presented. in today’s of discontinued all liabilities the operations criteria. as in presented operations. related noted During based noted, included the the of the fourth assets operations call results quarter continuing otherwise of results and date this business business above, business reported the Workwear the periods accounting of the the Workwear Accordingly, met determined that and operations and discontinued

Financial Chief be Matt VF’s today’s Officer, recently on Puckett. Chief Executive appointed call and me Joining Rendle; Steve and Officer, President, Chairman, will

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

Steve Rendle

morning, to quarter everyone. Joe, our call. Thank Welcome good fourth you, and

healthy loved today As you and comments safe. always, I find and your ones hope our

actions greatest emerging growth. I value enterprise. incredible brands brands' and indeed we of with Throughout smarter the proud creation. I'm our company's VF history. XXXX navigated in fiscal out our just were long our the for people to moment, crisis and protect to didn't turned to survive balance conclude of on know preserve sheet, our last. situation, would disruptive today, pandemic chapter early We not the and resilience capitalize and year, determined our what is We one how and the our next our continued of of did executing teams people, know both our emerge and their to unfold, agility thing. the confidence stronger, we to sharply growth we the As invest to most focused one liquidity as with on that years way position would our know Thanks but say be combined more it in VF stronger and remain But a didn't focused and even XXX-year XXXX, fiscal this VF and how plans, drive from the to opportunities we can

momentum this fiscal of all nine you revenue into earnings had crisis, As XXXX. XX% organic X% first months through know, strong and our the growth portfolio heading delivering

squarely the pandemic. the fiscal exit focused taken of have strong we as throughout XXXX organic All we've been regaining actions momentum on the

long-term value evolving deliver for also in portfolio we late significant This our acquiring near We align opportunities. did by driving is will exactly focused on come. by XXXX, market believe shareholders in creation what years and VF to remained with the Supreme which we to inorganic growth

our an Workwear accessible engage to greater businesses. consumer entered will of our them to brands technologies leverage that and deeply central that strategic financial the platform ongoing approach more journey a to Occupational and to our meaningful we in continued forced into to portfolio. and remaining accelerate last our in processes sell calendars reviews working digitize flow priorities. accelerate for hyper been actively understand We've initiatives agreement In with personal enables with growth reaffirmation a consumers continued on announced focus to XXXX fuel provide flexibility to newness this late ability new digital digital and the further XD of in long-term and them printing and and innovation. product pandemic And fiscal our data and that's addition, we've we development, sale our month The more of our go-to-market design The that definitive ways. business advancements to virtual effects production capabilities shorten

also off them about the have of organizational work forward. our to talent a and we model design by upskilling to propel initiative remained multiyear Enable, structure million company three transformation right ensure by leads equip with and example. Project performance our us kicked This parts digital-first place We Along purpose-led reduce business business to a our have advancing world. to our our on our accelerate we resources thrive global us includes know-how strategy, to that in in reskilling our continue workforce help building years. to capabilities, a evolve the will and as Enable $XXX focus with and determined over Project cost reputation

to the for because days when stores not of the end, around or was worldwide people-first the great our were proud nearly extremely pandemic. people approach the all activate health laid and darkest We that to closed financial their one XXXX. our through our prioritize our fiscal and the even safety well-being. retail associates We lengths world support of crisis, to months furloughed on went of during of I'm say continue to off

Last to efforts continue projects our meaningful the bond, and to advance serve was the from footwear progress we to Collectively, We deliver helping share. meet communities eligible green first benefits. worldwide. €XXX the in commitments all the year are apparel VF's we sustainability. industry, allocated planet projects million in net year proceeds environmental toward environmental sustainable tremendous our these around We to of world a the also the our

announced In goal eliminate addition, by packaging, plastic to including all bags single-use poly our XXXX. we

originate Going designed by packaging sustainable forward, brands and non-plastic for our from recyclability. sources will reuse and or all be remaining used VF

published our supply report business all United aim this also first human We're continuously we operations on and as and proud we our our alignment We work, rights rights. and improve in Nations human of in to with principles guiding global very the rights uphold across chain. human

work pervasive bare to CARE. took build that advance impact Beyond In to year events establishing the counsel our people justices the on the last and they global diversity color. pandemic, racial inclusion our economic and social of especially action F&R other plague as world, brands equity, of laid the response, racial by and

our employees consumers, our positive do. This Brands are CARE years just thing force what have young, and entire racial more collective deliver will is relationships. builds ability company to which for supporting Although their the as It be social in the we deeper is to brand and and movements it expect. equity connectivity communities. influence still than justice. take is for as long-term businesses, fight They within right engagement consumers actions ahead believe Operating not our and to a profitable our the a company we galvanizing purpose-led product. our between

navigate the purpose I Throughout unprecedented challenges outlook adjusted revenues virus to year, associates Despite we of with nothing surges highlights to our a in $X.XX, past work rolling business fiscal globally, deliver led financial digital a to $X.X want XXXX the few remarkable. with short from shared and are able start share any collective and results. per China this and of driven our year. We of Transitioning our our were of organization. was lockdowns January. measure, billion propelled from in global performance to line By earnings forward. in

turned our pure-play digital and combined business of growth. accounted grew Our incredible figures over adapted nearly demonstrate And speed total wholesale, to how new our revenue. the DXC teams XX% digital total agility. quickly digital and reality and online delivered business well for the organic how with These XX% when with world XX%

These In up our up ship in and and engineered homegrown capabilities, enhance buy technology e-commerce online, store; store; omnichannel including to new our from buy programs. digital solutions teams fact, five-month a pick online, in-store platform during stand a reserve period, channels incremental through to retail our which $XX new closed, of around all shopping simplify utilize consumers and year. offerings digital generate revenue were inventory for this of million stores the experience to further our when helped enabled us

we're growing cash free bolstered resiliency our generated Our from our strong regional XXXX, strengthen throughout Chinese from portfolio China and operations brands And XX% in $X Kong their business process our will appointing of testament Asia surpassing approximately Pacific China. restructuring and to the brands' billion Shanghai. China This moving center President of first-ever to flow our exceeding the fiscal insights We teams. a in revenue even and by targets. in-country in our VF's deeper remained also enable VF consistently consumers. into execution by long-term billion Greater plan to our operations $X fiscal strong XXXX, presence in and gain global of our Hong our

positions strong many ability XXXX key dividend our $XXX were has throughout command with clean marketplace that say approach fiscal ended globally this in over disciplined inventory our inventories our and we commitments, and returning exit shareholders. to to sheet to While to was million channels. our flow down brand their across raise clean in year balance peers year pause cash to dividend of A supported objective XX%, and our I'm this a pleased free forced modestly inventory this owned management position. resulted year,

our to Turning outlook.

to this in than fiscal XX% billion, we representing morning's growth. revenue saw be expect release, XXXX more $XX.X you As about

revenue growth peak revenue to to big our differently, expect to the represents Excluding but Said high fully levels. prior we prior pandemic, XXXX only single-digit during Supreme, relative peak four growth loss levels. fiscal strong this deliver organic brands above recover not

fiscal a Vans' our store which the want specific to with Throughout year, conversation the has XXXX question, in Before address on the focused marketing confidence Vans impact to the cumulative gives the its on of mind is growth me getting I and inventory deliver past to and disruption of and of a top outsized forward commitments? investment this by caused into audience. impact supply What moment delays, always closures reaccelerate plan, ability constraints. been take

have issues brand. short-term episodic, for are which and we impact long-term As runway discussed, this consistently all these no on the have

path we the laid which in there catalysts, me several growth near-term we regain return out enter to XXXX. and momentum ability to low-double-digit in fiscal are Vans' XXXX, give As confidence

that associates brand. know we of Vans' for advantage connectivity are the First, competitive and a stores distinct the deep

enrollment, return restore consumer. loyalty while a annual A Our stores higher greater drive the growing higher spend per purchase order average and will community member frequency to Vans driving shopping advantage, in-store value. higher this

friends, concerts return flowing experience around of with and elevated consumer family to attending normal occasions dining to a just This drop traveling. return This by not Vans weekly been a who cadence and the brand to from drive to learning has during experienced storytelling And a the and depressed product both journey engagement vans.com mind consumers is for demand to return coordinated schooling top drops. and to associated is past and lifestyle This attract Second, accelerate initiate seeing of a lastly, will to pandemic. importance with activities. A reengage younger excitement remained levels social the cadence brand. from exciting know heat. in-person normal, the globally consumers. beginning consumers to purchases month, return will that energy, events be marries has usage and core the and key for will to existing Vans as accompanied new next new of enhance ready a out, creation these product its the sporting consumers We they brand are brand deepen the experiential an year

lose of is Vans brand, sight to seeing our across of portfolio. our we're momentum the While don't largest the remainder want I

accelerate. strength which fiscal to clear. Dickies, creation important shortly, more Face has unpack is reached tremendous and Timberland is will we to North its start, Matt for momentum value and be We and is the could this point, As a at of broad-based. expect long-term quarter believe growth not path and off strong inflection an Supreme XXXX plan sustainable our The recovery There our and

with a optimism. strong together, entering this I'm sense Taken year of

globe over in respective to this and with team in inventory their shape. Each and stronger brands, good present, are leadership most long-range our as consumer brands a the We tailwinds both deliver the best-in-class strengthening brands uniquely from the a on are that the in enterprise of are company. our return our it to we skills have and and across plans from where thrive crisis of and to There momentum, are possesses now, turn capabilities year to Matt. as lead commitments. levels And we categories coming positioned the I'll teams emerge portfolio a and across our to

Matt Puckett

and to excited appreciative you Steve, Rest to opportunity first, friend. company. missed and I mentoring XXX-year-old by assured, my everyone. none, years say Best VF professional as more had me to supporting and you've Scott, this Good CFO wish is morning, And the the immeasurable, And am of an that serve on will amazing and how of encouraging let honored, thank many than for by my be me. all development. is but impact you have

our let me So, the with a lockdown vaccine We the mostly to of with improve continues the strengthening an Americas, operating of started regions. California. consumer. environment with geographic with closed doors distribution, across XX% in the overview start U.S. measures environment in region, easing Starting about and QX

these all reopened. doors virtually today, sit we As have of

strong rolling started have of sequential Each half beginning a May In finished EMEA, teams doors ease acceleration XX% to 'XX, our as we throughout and basically entirety and disruption most such were across the the quarter. except start US of Key inventories in Outdoor XX%, for by countries, brands by largest we particularly and fiscal UK will Lockdowns although fully a in quarter remained business our brick-and-mortar Wholesale region hinder channel our total closed our throughout clean, brick-and-mortar of France, strength has XX% the been and growth wholesale XXX%. about XXXX. period to continued channel the DXC store the broad-based and AUR progress slower strong, markets backdrop doors about portfolio, categories, fiscal to with the the as in the double-digit improvement the business fleet the through to have will remains While been this The with Germany and Face recovery in digital. are the teams Germany growth fourth We the provide across of navigate our with XX%; quarter months. expected and recovery, to and depressed, seen which closed. Timberland XXX%; a driving increased growth and during returned QX. Despite that rollouts coming to across store closures impacted from choppier leverage during likely digital, March. the of continued vaccine traffic Americas, have conversion notable in pace this XX% increased digital with closed North led

partners accelerating such in ASOS Our growth also strong quarter. impressive and partnerships with Zalando digital the as delivered

year, underlying fiscal China has expect growth momentum consumer. translate We strong to resiliency digital strong accelerated incredible and the into demonstrated in region Greater by past XXXX. The a throughout led APAC

at the by over region, XXX% brands Face Our billion prior growth our led capped this for Greater Congratulations represents XX%, fiscal VF QX the by COVID. our revenue, 'XX, XX% impact peak QX. Dickies. and the at in the nearly XXXX in growth North XX% $X before The milestone China growth teams XX% to milestone. of in All growth growing fiscal achieved business growth region the important in This surpassed off

us as transform view the growth across continuing a elevated remain as recovery opportunity, momentum teams up the congestion, supply a and port broader investments help business. structure The will constraints, of And Asia cost Shanghai the capability China that Distort serving commercial to on includes region. standing our continue to track, network. brand focused digital transitory and to and establishing our hub we and our leading consumer-centric indicator teams is capacity of to Greater and operations which volatility our pressures China largest navigate continue toward in chain advance Globally, with the strategy. on focused We transition our and our leadership maintaining

the to impact minimize tirelessly working are challenges. these of teams Our

volatility foreseeable to we for headwinds certain continue and However, expect future. the

have the this over one for Fortunately, disruption year. strongest successfully challenge the in past we and navigated having supply of chains industry are the unprecedented prepared the

into moving highlights. our Now fourth quarter

of and prior XXXX. due this As was morning's The benefited This resulting QX you shared in our relative in January. from fiscal benefit base to impact disruptions to XXrd year in supply the this in QX COVID-XX. seen from magnified the have in our low may XXXX release, contemplated chain week results was outlook a

brand its was big broad-based over with from our Supreme expectations. reflected XX% Importantly, first VF, shortly. cover Europe. extended headwinds rates growth chain the more the planned from and QX many this The dynamic or despite by growth in we XX% emerging strength four disruptions Ultra. from million of from supply acceleration with of our In revenue, lockdowns of our the growth XXXX fiscal brands is in delivered XX% highlighted organic growth $XXX will XX% contributed brands, VF and throughout business quarter growth exceeding

As expected, Vans and Americas heritage Globally, regions headwinds seeing in across and growth from Vans inflected progression and larger-than-expected than Europe. the APAC in offset strength balanced global more closures XX% positively, momentum performance footwear. delivering as store is

QX, globally. heritage during Pro double X.X the DXC women's. last growing High, and represented nearly over Vans has Apparel a and fiscal quarterly stores Family throughout sales, growth Skate globally consumers. and grew and digital old-school returned omnichannel million to of The sequential new X after progression stores growth digital each growth including revenue in million including and also also existing across returned MTE grew digits, members online now XXXX. and Skate both XX loyalty the Vans to both XX%. Vans March. mid-teens consumers enrolled lines in performed months program in added US During from than strongly Vans authentic well, improvement more in XX% which accelerated styles in each while Americas. contribution the XX%, the

Face The including XX% The continued key accelerating momentum digital stories, with which Classics increased the see brand momentum Outdoor The retail growth business. and product categories. XXXX delivered portfolio. for portfolio to by delivered Pro product iconic XXXX. this Co partially across off-mountain entering of on-mountain Face as from is lab new Shoes standpoint, Summer all with North North XX Timberland features Face, sell-through The in XX% an continued billion regions more XXXX the several double-digit offering; Timberland which experienced with validation And outerwear. With campaign lastly, of and strength than with Vans brand up From all media category also our Face's with relative due digital. of with which Outerwear, line. growth footwear, in continued wrapped partners. brand VECTIV yielding wear from read. largest and and year logo the Apparel, Running growth worldwide history growth, tailwinds strength including the and The outdoor of early accelerated strong Green highlighted from collaboration strength the Buyer's including also Gucci recently garnered has by brand's channels membership led successfully product XXX% light has by VECTIV earned fleet, than store impressions, and a reopening global throughout Guide, fiscal new remain strong growth an North program fiscal achieved awarded such digital momentum across the the Outside new Magazine's of North Face's franchises with increased XX% by TNF our in from The new future more an Stride, business North at April. the in out customers - as XX%, robust globally. We adding the new growth the engine, footwear, March Timberland Digital in led Americas. additional X million XX% and Momentum Trail products product XX% brand's XX% X exceptionally products The awards to XXXX, broad-based in Gear first-responder innovation Best X.X XX%. Hiking paid increased members several increased loyalty in extends behind rolled Year including led digital

than Finally, at categories. strategic Dickies $X.XX, the the regions Fourth product revenue. increased channels across strong start more lifestyle a and total all continued growth earnings growth recovery. double-digit from pandemic, across strong X% performance strength of APAC, including Despite headwinds XXX% contribution continued brand execution adjusted a XX% strong against Greater of representing XXXX The in regions, delivered organic increased with XX% represented from and XX% was and rate $X.XX fiscal digital, China. to through pillars in its highlighted EPS our growth Work-inspired categories. brand China the and quarter Supreme, work-inspired in a by product

the approximately investment approximately Our billion short-term on strong, our remaining billion cash $X.X and year $X.XX revolver. with liquidity remains ended as we and undrawn in

to As reduce sell Steve further into our QX. is entered Redwood referenced business liquidity net our in source earlier, late close an This position. a definitive which Investments, provide of agreement leverage will we've additional to and expected to Occupational Capital Workwear

our about peak to and relative now total fiscal revenue $XX.X we fiscal 'XX XX% outlook to to XXXX. approximate revenue. low This $XXX Moving our for representing double-digit includes from billion, Supreme of fiscal expect XXXX, revenue approximately million growth prior in VF a increase

North relative surpassing XX%, single-digit Face growth Supreme and the relative growth XX%, XXXX representing XX% high revenue. peak to By Excluding outlook The X% growth and global to to representing Vans implies XX% XXXX revenue. brand, and fiscal X% generate to expected about between XX% brand to increase our XX% in business, to fiscal growth, between increase of $X a expect we representing XX% fiscal XXXX. is to billion relative prior

and which with XX%, peak prior levels. Timberland line between XX% expect increase revenue in implies We to

XX% Lastly, between, relative about revenue which from XX% Supreme, to accelerating and to growth fiscal By we expect revenue. increase Europe XX% about prior with continued XX%, region, strength growth representing implies XX%, XXXX. expect about we peak from, excluding to up Dickies

in again, excluding XX%. ongoing expect between DXC growth increase continued XX%, to business XX% including than with organic XX% exceed close growth the our growth, momentum to where we organic XX% expect expect Supreme, channel, of and digital. Americas, by strength We XX%. expect China, revenue we In in in APAC By about greater to we growth led

in digital DXC VF We And including from exceed revenue fiscal total expect we expect total digital of year. penetration pure-play to XX%. XXXX come approximately half this wholesale, our to

recovering past high-teen to peak expected lost prior rate, our and business Finally, returning essentially year revenue the is grow at levels. wholesale to over a

XX%, organic down gross margin of in P&L, peak prior we levels. the Moving above excess expect margins representing

to of our We XXXX single-digit organic expect implies spend SG&A high about operating which XX.X%, fiscal relative an margin growth levels. in

investments let to unpack XXXX, of fiscal those large continued against A piece me to our to assumes strategic business year. creation moment growth which SG&A model investment $XXX consumer-minded, priorities. peak simply growth from piece relative the Relative our and digital, XXXX and drivers in Other are million a foreign large transformation demand growth be of our fiscal hyper today. large is within commitments prior the Now SG&A supports take expected covered our plan retail-centric and more strong growth this to levels. over the A episodic of relates growth-focused incremental currency. to

dollar currency represents expected XX% growth SG&A. the Foreign about, in translation of

Another episodic and growth of our distribution SG&A relates freight. elevated to piece

are mitigate pricing cost power globally. time addition pressures our over our to We the in strong these ability brands confident enjoy in to

costs to higher will However, be a profitability. near-term headwind

wrap our long-term see of of per XXXX, to about tax XXXX Moving given $X.XX per we from today, XX%, including SG&A from share a brand. earnings algorithm minimum an the forward, which our to composition margin outlook, we plan, strong leverage Supreme P&L our optionality. To as to fiscal investment SG&A fiscal with brings us our $X.XX, supporting we expect rate we the gross approximate share expansion leverage and portfolio to exit see a and contribution our earnings at return expected up path XXXX

growth $X are spending a of expenditures forward. in as includes priorities result XXXX as over impact planned investments million. operating no moving of There billion fiscal from well generate This changes $XXX as are approximate cash the our Finally, Capital deferred to allocation to capital COVID. we capital flow. to expect

XXXX and strong expect we a leverage will allocation X.X growing Our we M&A be opportunistic committed appropriate. remain remain and always, three with we dividend, and explore other net continue sheet which to end as times fiscal to alternatives, will We will between capital and focus, balance to as times. our with

environment, a in So fully we investing be plans on We evolving challenging us to our value fiscal growth, not managing flow and VF navigated business, our long-term cash how executed our pleased more in best in with driving creation. has free digital summary, for organic XXXX. position portfolio could while

exiting growth XXXX, a with portfolio. to the across As throughout very beyond. hard ability into accelerated I'm VF's fiscal work result year And this fiscal confident we're in of XXXX broad-based and drive the momentum

take will turn and call over to the now your questions. We the operator

Operator

a time, session. question-and-answer you. At Thank conducting be this we will

with first line question. comes Erinn Please Murphy question with from Sandler. Piper proceed of Our the your

Erinn Murphy

you Matt, Good to guess I as Vans. for Steve, and all morning your to congrats my appointment CFO. on guess, I question,

you growth. X% towards fiscal XXXX. some of upside X% little that more You of gets What on talked the about see you Could algo? in guided the your to to could just potential that prepared what context long-term back this share you of you are versus algo. some that And specifically? digital the mean, the remarks a follow-up bit about year long-term I drive levers could then my on is just

As seen May, have you reopened into stores in and in much. then April digital? have what so here Thanks

Steve Rendle

morning, you. and Erinn, thank Good

lot but outsized closures, also at out the you my stories. a of from year. disruption last confidence the So - remarks the early really that impact about and talked March my coming year the script, to Vans, tell we on Vans hope that see have the and momentum clearly, I this all just store in in the We incurred our into building marketing ability through noted we the and that inventory those impact

very part that think we be advantage. know a their their As these we this to consumers. those significant. think, really the This competitive reopen, are is we distinct powerful where upside could very a of connection And stores year, about I as have,

it's - and on our loyalty moved order higher paying value the higher - this when to purchase We is consumers that the family impact occasions cadence current loyalty. today. in of significant what's long-term drop out to XX-week a some that kind in on that that, continue an a - and products XX-week consumers' very and be we see be. running coming to moment stores acceleration less that, could this it for and can't new see about We front engagement return year, as growth the then it's all out and will brand's member usage this clearly, that have consumers, very, March drop will engagement. of be digital to you normal The off really this and has because have of to us at think discount about it putting every that is just But in story, a our consumer Erinn, and And important, a week to engage higher desire and them you are drive purchase. could April. We frequency the reach it last I that we're but see been up attract

using a For create view we roll only we new our standpoint think you it land. would concept. will environments fleet. e-commerce the but where big sure. engagement And that, we're going Vans and single that engage And test not store able I have user with store the choose digital part we're new how us be a with will We're wherever Milan; sure able not moderate a critical across to big out prove connectivity, us us, We for it as But is and to we really with us. however our it as be you in method a engage of greater with clearly, opportunities that well communicate to the connect environment to to VF and a with inventory. with that forward, then advantage Orifice for consumer seamlessly service a in-store is able for our content, of that on you, we're are you how think will - as stores connect

Matt Puckett

Erinn, to we inventory supporting inventory the get to a is news, Steve's we're to got I'll disciplined be we've this group continue especially probably the Vans and you and little business ability come thing good obviously. business quickly more if to I here, to is But about the in certainly remain for back you out, opportunity in as that quickly, how pretty see add standpoint. happy for But an it Matt the shout relates thank from the brick-and-mortar, back the one there. to the think comment about Vans understands. think the

little see business, there given move we we'll we that that support of that some be brick-and-mortar to of some the faster, So, Vans. and relative quick able in side begin recovery we to especially the that to things level capabilities the do the could of able the have lead-time of we to upside if term a support

really the after initially bit as the then than looks in more confident little plan out, a to we're have we've get think but also momentum to maybe called, that that I we've opportunity well. laid see what if we'll So,

Operator

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

Michael Binetti

from I just slides on coming XX wanted in to your guess XXX ask you a of here, gross basis just with rate looking at quick I from points the FX. the quarter, a one margin. headwind

there So, is I think the math in points from markdowns about basis the some XXX quarter.

we've inventories pretty I price the full and good think are selling clean, your seen in market.

quarter? we have XXXX, one were to you of that's - - just if get as help maybe could you us that you seeing geography look sense the couple quick orient channel, of a could that then maybe to And the little give confidence just just through SG&A. which on how us are you Which a that? right, the would you to to headwinds. And of think gross thoughts for the the be components build I ahead on a to guided So, of it, in where margin brands maybe think where markdowns then the in just bit the

opportunity there's your leverage for said You back algorithm. you on get as

embedded the me. of changed there? what a If That bit on so, think any change I XXXX sound leverage. just to maybe like a SG&A did no September thoughts plan

Matt Puckett

where we out and first of of through aggressive saw has we've strength. perspective in I'll play right take into think went as plan quarter honestly, gross rate to fourth you the play a I clean in the in out We off, regard. seen well, What really, be in started that. And our the year as in this on really with done year. we've been year the we expectations. We've our a back we to line from that executed terms we end to year were position margin, the and really going end In a year, said position well

the to clean expected remember, we have some emerge what quarter, choices last that that. out even in and the you are certainly to You made fourth summer we of impacting play saw

seen and to has obviously impact that is XX puts We really but particular, one as our difficult business the mix. that driving across the our throughout through from year point So more for business, ending aggressive one that. did on of been the by trying in call disruptive year clean the the to year component seen brick-and-mortar in But has no some we've approach end year channel sort to kind brand, closures the normal full of predict that. of year the continually and The us project element this the the of has no been a store took of there basis the basis because certainly, takes year, we mix with of unique a we've terms mix, year. a big been be honestly piece that

through So can executed I partners, really look will When of our about consistency the that the terms year. of think year the on really more we some business plan the And comments, on the quarter-over-quarter out to historically and will and margins a of But away right what said for margin nice a then because there. really about expect as move end, be thing the the be typical in the confidence We're certainly, as a levels. is the of our ended own in we in gives more we as actually our confident will just mix back mix, the quarter. there's also going XX% year, in margins be benefit as gate in side. and of we snapback so a really in we've to we're the a business us business, basis inventory what gross see next intended expansion really, with peak sort to. that's we mix that the organically first right do going play the be equation you little really, And here year. QX. inventories terms there year really back clean, us. prepared full to really And really starting year. And seen the how out through down in gross returning gross It we that is in prior expect been inventories, you're of clean managing both side retail variability we more our with We type but lean to slightly the take from of organically that above normal of consistently mix next of most at the in terms

I is of have the XXXX. look think terms forward some there - we SG&A, of out is coming the indicate wanted In with yes, to we leverage ability to what that fiscal there see

opportunities, creation invest You transformation. may have talked the that's point. give our the or remember whether be us biggest will to leverage continue optionality, and support growth - driving Beaver to about we our a optionality that at still Creek, lot really We'll to continue demand it

nuance parts of optionality leverage SG&A invest you difference. of that's - sort maybe to It's the in to any just opportunity and a think see So how the so. I we I really of about really terms it's do creating don't opportunity in think if model think

Operator

Adrienne Our proceed question. Please next Barclays. with question your comes from the line Yih with of

Adrienne Yih

details. you Thank the for all

chase, and my does what we're that to - nice see well. given supply? first you're through of you the I like congrats Thank of supply are in the guess, bookings everything Matt What's chain of look follow-up. where and are And the weeks questions holiday all? fall I'll it's cushion the likely sharing seems building to have then a wholesale seeing And in to remain very my bookings of for always, in as Vans' how is, As terms tight is on you year-end? some you the one inflection, is, much. given how inventory the strategy shipments,

Matt Puckett

a think, buying retailers a Yes, think think prudent. logical. are We little the a support Hi. morning. to approach we're there, good line is the be just business Certainly, some to are Adrienne, certainly, We're and there'll stronger. of I little The has And with books, - In And back order maybe assumptions the bit. little the bit is that. buying do becoming if book. opportunity right first thank been buying business yes, bit in a realistic of to environment, more typical. all, and support in stepping our the our you recovery. view, I terms more

We our continue in to disciplined posture. remain

supply at cutting bit We're order now. we in we little what buy. and more looking approach, some to typical As disruption. you overall the Certainly, talked we're there's the you in our be of last then expect, a disciplined, talked business. year, that's would a to There to support as about doing headwinds terms not that buying near books there. That's back some will chain term,

the interesting challenges as doing, some doing. we marketplace now, back-to-school as holiday to without challenges, we XX the from what in fact they're supply an some as ability a sit And well even working we incredibly support in pressures, the not mentioned, and It's today, ultimately navigate some as But time that and chain of the really in mitigate right months. supply comforted we've in sure confidence to last be some lot got got and headwinds for understand. positioned we're chain, been that selling industry, we're they by feel we'll we've but best the been, really and the all perspective. of hard and cost what I got the here season, confident we're honestly, However, have and we've for there our a

Adrienne Yih

DTC? the target, structural much. that shift of margin my fiscal to Thank Matt, on very digital follow-up you And to retail the from is much the DTC on that? sort what XX% comes then wholesale how op will the be XXXX, And from of mix

Matt Puckett

Adrienne, can first question the say you that part again? of

Adrienne Yih

my DTC thought penetration the be DTC. digital correctly, - what that? I question the Is XXXX mix I within to fiscal was of and going of numbers XX% that was, got brick-and-mortar the so, would to be aspect If of

Matt Puckett

Yes.

we've yes, got So that's you. I - said good.

around right owned will the half. DTC - think be be will XXs. total digital I in our roughly overall the dot-com business, And total So low

Adrienne Yih

Great.

Matt Puckett

total When business over little you be including XX%. our a our digital digital wholesale total look our at business, partners, would

Operator

proceed your question with with Vasilescu Laurent Our question. next BNP Please Paribas. the comes line from of Exane

Laurent Vasilescu

brand two-year on about Supreme, thanks to out, wanted call. ask How for that new goes about and think your want we as Supreme. responsibilities. a do to number to Can million. on for months? a fold under stack you twice for dark or basis? the to morning million having Steve, $XXX you parse the year-over-year the have Good learnings that me few last expecting seasonality that you a the any up with I share Matt, maybe grow congrats, basis think you're because I name And $XXX your how And key year?

Matt Puckett

our which Yes. fiscal Hi P&L a mentioned of bit Laurent, of quarter, you, with here expectations. of growth the as strong seeing Supreme. with tell way. mean $XXX the the Well, to its million what And forma in early our of through say, And numbers on by Matt. would couple in expectations. topline, we're really really I'll things the We on I'll little in the you, confident the And ahead also I days, the rate pro of early of we're ahead little going is both again, happy well. was but a not a disclose I first side. we're thank the all, the really start Supreme. performance number fourth we're bit

Steve Rendle

quick, is a just over we've learned. days real Laurent, is quite what then, And integration, well. XXX the this Steve little on Clearly, into going we're which

opened how drop reaffirmed brand to the to take approach model, as coordinated and the just effort begin that the leverage the and think able reach the the that as international they management normal managing Supreme the confidence weekly basis. VF to model strategies. what rigor been volumes that be ability across to brand, growth We capabilities, Milan they'll with now They're deep the the of experience us a international globe, and understand get to response and the products, they which the knew their and just what just just the consumers better meeting is gives the the connecting and it's I the mix great better consumers, they VF is deep, on and rigor team in, expected component different know recently they from the apply saw into their you tourist against weekly despite behind limited we traffic. going store, we and just

VF we would that to learned long-term to So, confident and it's opportunity everything And that what our Supreme brings the we and we it continue creation be diligence. through thought shareholders. very value be in

Laurent Vasilescu

to benefit? fair lead Are you boot assessment a Understand That's vision great to comparable Susie that to be you to hear. And brand? fall recently guided talk Is FY seeing know brand and the brought season? strategy But about Timberland, transition. as the XXXX. you her brand. emerging for follow-up, in is I a the an it's Can Mulder the undergoing a a timberland trend around

Steve Rendle

Yes.

strategic last day do or direction, and a it's And environment, hit the posting largely us. Outdoor Street, And XX But think, be importantly, low we poised phase Apparel; in I and to move running. with very to came leaders that I reset arms leadership And to boot to to we're nice meaningful anticipate strategy. and our around platform, the drive fiscal nice leader we engage offer. wrap greater our growth think looks Pro our Wave she But are Zoom to and see mark that in speed Cloud, our actions and for she's interesting Brad boot very, product marketing against think would of to the don't our is marketplace new is we're put balance I growth we're and a doing And But telling ground fiscal the is, on really join with and up the the our in greater next are lifestyle on more to she year marketing Solar we Susie importantly, Laurent coming their is teams see evolve watch trend, through in monthly trend, you, this quickly. the planning consumer really it speed a to to the fiscal in these And the I growth. her in team new will our having Pro. and single-digit it's sure, business. seeing through able the more what Despite But So XX background we've how balanced. seeing also And behind of up growth just not that business; think, stories the I in are engagement capability. any outsized Stride fact, you'll tell positioned XXXX. The planning an outdoor The change have that to business I built coming is, us thing, is product. our out what there's things offering. has are you're represented uptick on the think, trend sell-through. comes XXXX, XXXX True and even but I her think been But flow in to growth. for between Classics team evolve about seeing more product flat. the is with with been partner as very there the Green

Operator

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

Camilo Lyon

ask my I to seat. the wanted guidance. And Matt, welcome first hot to I'll add about

be seems at faster continued than of lot happening the more replenishment to supply like into have think parts a typical on of that are wholesale still could that moving a half Could you shape then there's European year. give unfold would - there's And I chain versus you If amount. disruptions will cadence, be It how maybe the a happening front follow-up. you think helpful. the back still closed. some doors year I half? very could

Matt Puckett

Camilo. you, Thank sure. Yes,

think coming for consumers having the mentioned back into of things It's top really environment difficult and you us. been than we've you as is stores. said business it’s a certainly, are project up I all But back certainly to it well. place better are the coming mind

our where business, a in own are consumers environment. the in that of that's those parts continued We we're going And see well sequential shopping physical stores And in as year. as business the that expect both really back our through the improvement wholesale particular, partners. to across continue

in number we we've the digital good all to expect teams business done. our improve. our continue that the time, seen have at the to we quarter, every same strength that continue, given And the think there that progress expect and I to work

think to relates revenue numbers XX% we to I'll themselves, growth be just expect you, it As about - we I our first and half tell $X.XX. about the EPS

you So bit the have smallest obviously, an is I'll we're always that. our lapping part Supreme quarter of seasonally that COVID year. as lockdown and our contribution remind of quarter a of from first inorganic

that obviously, to it was double be expect But do profitability do continues. So last and return about QX. what expect in year we to we QX to

Camilo Lyon

Steve, color. I to great that, That's then, wanted for you on And ask Thank Matt. China.

from you perspective the just If give is a perspective. size on some where could us business Vans today

tiers runway could you perspective penetration a how when it path on that of You billion brand. growth But could basis China the doors entry or talked that from you? of distribution front a any the anything cities and you on us market have $X it's being maybe thoughts Thank in understand whether share of just on Supreme and the unfolding - a basis, see about in could help And then you. you that happen? there,

Steve Rendle

Great.

think our pillars. around is Vans in it's as really So all run Vans million. we why just businesses. we for our - peg have strategic is rate. Matt, it's China true one were $XXX This our That’s case business, largest I growth - the of our of Vans business there

Matt Puckett

little A Yes. million, over $XXX yes.

Steve Rendle

and cities what is - but digital X, just of we opportunity the Tier beyond into tremendous X grow see Tier importance also clearly X the it's And to X, piece.

use an in engage even strong to for go-to-market and our double-digit has important she is that component. part year important our how very for in roles the prior make supported from tell strengthening online very skill new She not is by businesses every with the set but the last a fiscal has of China there's for consumer strategy more is was of opportunities part market, stories But is one go the the more the engagement think Titans, as and bringing strategy. brings and and we already getting our exciting just and showed and us our the stores engaged think we a those in-person that this important rigor into leader, Winnie, good partnership and I as more very - skill to of she have what to I positioned continue Vans, XXXX. just growth our to CPG

Camilo Lyon

then China? And on Supreme in

Steve Rendle

yes. Supreme, On

the we leverage team get bit region, of just our we as a how and Supreme, engaged quite Asia with can more China. work model platform, skills and on is understanding importantly, in So going our in but the

You done. won't this that It come is year work anything next see in year. where year probably the and will after be will

consumer it team is location, store. the enter our in able years understanding market where markets which consumer, that time begin marketplace. we I Camilo, of the be to such won't key store able the be with come. teams put ability a this amount part how of the understand they first year, specific to And They They critical market. here, will need of finding how think it drivers a to why to partner be They best one that is and to travel then the to their key the tremendous spend to think to need those the to Supreme's of be about get but penetration. new big is is to markets and consumer

Operator

question. from Our next Boss Please your the with line Matthew proceed question of JPMorgan. with comes

Matthew Boss

was share a the pandemic Steve, North consistently during you've storyline pretty So key market that acceleration at talked Face. about

North you Face to help this overall as of in year drivers for unpack XX% forward? XX% prospects moving just could maybe you the and just confidence see for growth So forecast

Steve Rendle

Yes.

own we're becomes the the able growth in strong China channels, really seeing Olympics witnessed middle really in it importantly, is outdoors its seen that's Mountain, would I clean over here well Mountain product we that mid-teen they're the growing that with not is that but really I from we're just market being of the and good in our really we're Asia, Off setting from the right And nicely the move significant big up to what But few tell here the So the prior we're own the even here momentum more XXXX distribution, strengthen On sell-through. performance really becomes Mountain Winter building, in up sell-through way and with consumer engaged now focus, growth stores, benefiting And here use key to U.S. creation. consumers We've part But see holiday not peak with has that. ability opportunity. saw lifestyle drive into wholesale tone, Off versus it's strengthen and the one North a mid-teen we're of only being strong partner franchise driving XXXX trend, revenue. really is story. relationships but think gaining and demand fiscal Europe. seen market seeing platform and own really our that digital in the to product our outdoor has balance management, China growth expecting But years pipeline, momentum. profitability been engage and last and a also you, to really fiscal They're benefiting from more stronger growth strong Face work as as globally, set see really really in in certainly the strengthen On Mountain and to benefit done that we The for wholesale. disciplined we our return thing. you our

Matt Puckett

we add, just planned way the exactly this I'd Yes. is it.

the what and strong, the back globe. would very business remained as And we on are some in across this came work revenue, and and doing happen. we that year, incredibly international pulled As cases talked surmise inventory that some our maybe probably way through knew we teams we in has probably our Americas, saw scarcity about we impressive creating even been sell-through that fall winter math back clean leaving well back The standpoint in that in absolutely as next really cases, and we too it this North us year, about just think that positions coming strong year case, into and inventories And did. from we've Face's in enjoying. really build really continue some really, a low, And as low we

nicely. So yes, it's we're - up set

Matthew Boss

on And now just to just you then And sustained could the the algorithm? So say increased is would little of it's a leverage? gross all confidence free greater a the SG&A revenue feel drivers multiyear, mix to minimum at margin if return growth, elaborate higher or of accretion, above applicable. the long-term this this be to

Matt Puckett

Yes.

of but broad-based had, think the I You confidence said we're that brands. at nice it pretty into well, and is really the albeit the probably in the maybe. the But all we've emerging nice some good of the strength basis, year - well. feeling the about smaller as that really some thing numbers that brands we're all brands, seeing looking We're big coming

So, think I confident in we're that regard.

I other I again, and into recognize all Work a think we just benefit. the and the Occupational in some that equation the think is out equation Supreme bringing acknowledge of think pieces, of taking you about, terms of,

in in the growth are in China COVID not regard. in in know be everything to us. a again digital, a growth Everything also to that that outsized going - is equal of recovery. We back is midst a We're benefit outsized

a and improvement see into probably fiscal continual even brick-and-mortar extending our in XXXX. business will We time over

the to long-range - Day that we and And we that begin you up, good and to comfortable the our need really over to point we're emerge about takes there. So and confident looking stack that committed Investor really fully context will But there it overall minimum. in several and as that feel puts we'll in our XXXX, full XXXX and in update of year. at next quarters are some I algorithm, the recognize say a when XXXX into all the beyond we saying plan, LRP, next there's in at do a calendar we're

Operator

of Bob your Please the proceed comes from question. next with Our question Guggenheim Securities. Drbul with line

Bob Drbul

for questions Two you.

go that question, see how your foresee in to to first is, can investments you do Thanks. you bit going Where on marketing where of up you sort end the a think second spend? I plans And marketing one XXXX? as of And I communicate of weekly the marketing the guess, levels think in that? just about terms this did talk drop overall, what I you're off of they you do the little the year? Vans,

Steve Rendle

pay I'll second Good let Matt I'll the to back morning, and take your half, half off Bob. question. of the first

engagements very consumer. enforcing and those weekly consumer, important will product you stories. here is story. these of deliberate a has It So, opportunity something them the be also stories is drop, style. to they'll very and ads could pull that, more think coordinated for the launches will prepared local well there things touch need with last be co-lab. connections to the It the be to it new this revenue And could Bob, see where the And be together. be we've weekly product this community a a very been coordinated just be but is we'll - supporting could It type that I Vans to franchise, take But some a an what think like moments of the often for. taken new their for a from engage foot-to-bill effort color in year, existing an And do that's global is is specialty times, stores with we've done how consumers. learning to frequent advance

able online, due hear coordinated drive will XX e-mail above our both that that heavily piece diligently our that I to that working the think towards in-store the integration us the experience that really of element the their as But focused and are really seamless very unique through piece how a and social they're to well, you is on think to through of engagement, that we'll and I membership are and particular will is linked now online appropriately. a really be that be loyalty that important access demand marketing sequence consumer able the talk in-store really direct our that creation program key partners part. teams certainly our power that engaging being million to stores on, opportunities wholesale to own loyalty about through marketing, people channels,

Matt Puckett

morning. good Bob, Yes.

the we're than actually the $XXX creation. SG&A increase back both from then fiscal of we're making, are and in well focused pretty of our ran that percent line certainly, pretty have We above the we it's back in ROI QX demand back the activities, to XXXX, back build XXXX, and marketing returning and terms with as in And talked a to in that modestly, marketing. in very and we're half of levels of ratios. And to as levels the way probably terms our higher in on In standpoint come QX, ratio highest way absolute down, actually prior slightly a we year about 'XX. is then numbers, historical what in in line remain and XXXX piece revenue. from investments much of We in disciplined year began as fiscal million in pulled a levels cumulatively, significant the management that big the first

we've good As to and terms more the there the that is really you shifted and marketing get of ability the effectiveness driving digital, towards it's returns of reads news the quick that in around dynamic previously. could maybe And really against more much certainly can that much that you returns. see move to your those and in are quicker be move you dollars driving than things ability

And that our revenue confident to support certainly, - going leaning assumptions back returns. to we're have spend we're outlook. in the So marketing is the we recovery drive but we in strong

Bob Drbul

to follow-up would back like or and do Thanks. another that in the the how with maybe get you acquisition of question where you is Supreme disposal future? Workwear of in And feel then the of do the potentially on timing the you are digestion a And on the that envision trail? business, just like ability terms

Matt Puckett

Yes.

or well, we've a lot got XXX-day the terms the in there. we're We're Supreme dealing past well XXX-day of well even with we're So passed - the mark. mark integration

we more But balance at if I we've position - - So normal look sheet our look side as there's level we're we're think consideration taking at to focused opportunities at paydown debt leverage to foremost, you that done. to the line, we've that. of sort of leverage that on EBITDA year, and times. in returned some going first sort be leverage to work think We X to the leverage we're seeing the net this X.X do and ability year into got the to back leverage, bring and back this exit as

to be in we position from that, pretty we'll about think committed the our that ability have a our think to year certainly, capital able one Bob. the quickly, allocation. through capital back begin priority. as dividend, remains that. I of result in more meaningfully nothing's M&A so And we'll certainly, half to to And do but move allocation And be number We're changed to this

Operator

with with Wells and Ladies our Ike from gentlemen, the of your final comes line question Please this proceed morning Boruchow question. Fargo. you. Thank

Ike Boruchow

Welcome, Matt.

rate understand fiscal you ones. Just Work the Is back there any year? 'XX fully? get year, margin planning more kind lot understanding of kind capture last you're two planning of Thanks. you're how a this side, on I'm year. expecting curious And that lost levels But in above clearly, just rate sale I'm the this on on trying from details quick to margin component XX% of just then to that much Occupational price? the that. gross of to back to are gain back line markdown

Matt Puckett

Yes. Sure, Ike.

Yes, of we second that expect back. most the with of start that part me question. Let

going the little there's forward. of we much bit as a I model the at we're normal levels speaking, think said, way a there's in But business still perspective, assumption probably from back I generally - overhang pretty to our moment. rate the

the will be relates Work to I'll I'm it going number. pretty you the proceeds you tell the to sell, tell not significant. As Occupational

think with presentation. to And 'XX in cash $X I these inclusive we fiscal billion some of expect the end we shaping did about get in proceeds.

and in debt outlook other dividend, - or our not than So repo the we've assumed share any for the repayment fiscal.

Operator

Thank floor comments. our you. Ladies session. Rendle turn question-and-answer that concludes Mr. for any to the back I'll gentlemen, final and

Steve Rendle

the and understand we through efforts you I that well. joining thank the now just last year, tell you how coming opportunity to about us. And you, investments specifically March and where brands, those X international positioning Enjoy we've our this. strength and and the put strength hope momentum return business you growth around of for the rates. our with big next And walk and the broad-based that the us the fiscal the Well, year really connecting capabilities of Great. the our accelerate platform, leave would you positioned relationships through I would acceleration next year. our navigated that with framework enhanced loyal digital made we've we China us has the stronger everybody, we the across Supreme, pre-COVID talked addition the place, 'XX in see headed well to throughout I consumer really has to extremely of we're just into

the to across capable now in our single-digit revenue a to we pay work complete we As year. off we portfolio, that's Beaver Occupational investments And low able divestiture fiscal integration the to sustainable Work Supreme portfolio the of the teens through and earnings basis and have look in to high quarter-by-quarter an of growth being delivering organic you that we on forward next spoke about Creek. that the

July. we and forward to you, talking in look thank all So, to you

Operator

This today's concludes you. conference. Thank

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

V.F. (VFC) 21 May 212021 Q4 Earnings call transcript