VFC - Earnings call transcript Q1 2022

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Hello and welcome to the VF Corp First Quarter Fiscal 2022 Conference Call and Webcast. At this time, all participants are in a listen-only mode. [Operator Instructions] As a reminder, this conference is being recorded. It's now my pleasure to turn the call over to John Kelley, Senior Director of Corporate Development and Investor Relations. Mr. ahead. go please Kelley,

John Kelley

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

us XXXX with impact the found Workwear and excluded which supplemental You provide which additional all on can operations. amounts, be presented tables based the through has noted, and held call may assets business Due in included results of cash reported this the to Reconciliations basis. completed why items otherwise to for certain business for date on this view comparisons hear quantify coronavirus contains discontinued results liabilities our of in also are sale XXXX, and period the information on useful identify to and release, amounts fiscal company as related measures the are in included today's the GAAP. refer same comparisons periods continuing the is of Accordingly GAAP and financial US also Unless for management's adjusted and disc On to ops reported accordance flows all press the company in prior in of sale. year operating all the Occupational today's are June significant of its pandemic of investors. operations liabilities figures, call the These under XX, the to sale this dollar context. the assets reported of the business. of

the be and me Matt and Puckett. CEO, and Joining will Chairman, Rendle; VF's call Steve President CFO, on EVP

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

Steve Rendle

Thank good you, Welcome John and everyone. our call. quarter to first morning

the strong XXXX by encouraged year. to are fiscal We our start

while Our an teams first initial driving earnings delivered to quarter well of VF expectations. recovery levels pre-pandemic powering outstanding back ahead our revenue an

which my We ability continue to portfolio, furthers see our fiscal and confidence XXXX to the accelerate in growth broad across through based momentum beyond.

off While the with across levels brought uncertainties teams further brands, surpassed to business. start with highlights. the consumers pressures parts by of other remain the are can the We somewhat remains environment regions we Asia, on supply control business and surges on clouded virus chain, our Southeast new of variants in impact on executing. things near-term focused global the with strong. that our and by back the revenue in or sharp through in And some our channels. in our XX% this confident growing QX walk recovery billion across our we $X.X detail, but has results you continue ability XX% Matt, organically pre-pandemic regions, coming driving to momentum will remain and I'll VF winning

stores continued and acceleration prior business growth mortar by peak in DTC US the strength levels to relative strong high and from our single-digit our digital. in brick global Our driven delivered a

XXX fall past which our We've XXX% omnichannel benefit sharp XXXX business gross organic recovery of we and XX% grew our recovery Our QX We've fiscal organic expansion This inventory despite of points to fiscal capabilities fiscal peak our to year including consumers represents margin, earnings organically VF basis business a in which XX.X% QX. and our environment. drove their more from over and 'XX XXXX point growth grew channel basis across above relative margin challenging a in levels beyond. XX of levels a now organic 'XX prior gross logistics line the top gross this clean than headwind business, anticipated, the spring in expansion strong for a sell-through model for of wholesale improving $X.XX supporting as outlook translate potential is recovery delivering margin into into channel. an plan. from DTC wholesale leverage levels seamlessly stronger serve an to growing our We're and indication peak see essentially in of digital SG&A trends seen and as books accelerates. year strong QX. doubling pleased XXX% momentum upside choice flow order the our XXXX translating our levels. our in through Strong our prior better are and approaching earnings freight now seen

in while with in growth of Day the across brand stores growing led despite in our supply been encouraging has been grew buying KPIs which consumers pre-pandemic Now, DTC markets APAC in region. more per business spending earlier levels. each tomorrow. of the continued chain by our In launch major QX. to EMEA pre-pandemic expected Vans representing the relative the will milestone China DTC led shopping to disruptions, XXX% the consumers This purchase throughout by Vans strength as with relative turning program on based lockdowns trends be Brand led launch business stock levels frequently with all strength quarter. growth historic with has June More XX% more for Vans Vans growth recovery to than fiscal digital. have brand brand XX% the in-person by in growth returned to grew Tmall The celebrated impact experiences highlights revenue The as growth drove Super to Vans and DTC broad region China. official reopened XX% business, relative marked this to the quarter DTC positive and double-digit we with and in returned Family XXX% XXXX the XX% to relative reporting QX, a the from levels. fiscal global see XXXX,

one on predictable, Internally, million We by create further new Vans believe focus, the globally out the initial Global on aligned around this early to The have resources seeking the sell and its value and consumers. increased newness Vans fiscal to reads underway. QX off XXXX brand consistent, drop million the holiday to up storytelling, moving will registered and the in into and bringing the Seven focused school season. through brand. fiscal remain is long-term drive Family to set early We initial and for already consumer fall more quarter the members drop following it's Vans are membership list bullish approach for calendar season launch the has engagement. and kicked unlock XX encouraged nearly loyalty from encouraged to back team XX a formally consumer driving compelling track over several instance by team we Vans energy, of drops. which the weeks are energy ahead program, Vans we market of the reads week the

to off representing growth fiscal to raising full XX%, growth X% relative XX% to We XX% of XXXX. to outlook are of year our

exceptional the growth fiscal APAC pre-pandemic XX% Moving the sell-through franchise representing Face's XXX% fiscal relative digital the by TNF establishing despite to levels. on performance to in to years as All spring footwear on-mountain door Vectiv in EMEA, ability brand's XXX prior in highest to continues in relative the revenues North grew of X% FutureLight year, progress drive in the regions North versus highlighted XXXX the levels. footwear. grew well growth brand on day period. rates increased in drive Face. strong in above the by XX% impact closures rollout, The the outdoor as and sharply QX, its further The energy rebounded to with Global over XX% which legitimacy some 'XX, of XX% continued where categories business relevancy. highlighted QX, reflecting

the logo We in QX exclusive XPLR categories show QX, also program as and over in to casual engagement TNF which journey. reaching loyalty adding X has XXX% Pass million the member brand growth with experiences grew nearly in consumers members the new as outsized driven strong over consumers wear, consumer XXX,XXX Off-Mountain. grown see such the by

by in be now broad-based the XX% delivered Face relative to growth XX% the to seeing XXXX. XXXX. to expect QX mid plan. significant growth XX% global in momentum encouraged and growth the this at fiscal recovery, expect ahead XX% tracking strong to The brand continue North Alongside top brand continue we're line We improvements profitability representing year, to of TNF in teen XX% The delivered Timberland for and fiscal profitability

We in level. digital are growth growth Americas, the and high-teens by to XXXX fiscal relative in encouraged XX%

Momentum each heritage strong iconic behind historically Outdoor, Apparel, continues to continue low XX% growth We also from in despite quarter. and growing styles PRO over see the product with Timberland demand being inventories. outsized core

recycled recently by Take-Back to to XXXX. bold positive announced products. to team This remains refurbished will or Timberland Our the for fall able with return nature partnership net be announced the on highlighted its store impact into have products Global vision led resale committed for supports future brand product fall Product by consumers any Program to Beginning purpose brand's a US this program ReCircled. be either in Timberland last vision to a

surpassing modest delivered a by QX, by wholesale pre-pandemic campaigns fiscal revenue. be the in Timberland's brand regions US. Lifestyle several growth the strong beginning another exceptional well kicked represents both quarter, the been XX% XX% work in about global the encouraged all has now and new inventories performance well Work-Inspired we've partners product, are as QX. deliver we of continues core Dickies year across and to start Work-Inspired surprised to become result, three as the more items. as reported to growth expect We all plan XXXX This sell-through pleasantly driven now of in across strong by acceleration brand revenues as brand our available, relative Lifestyle off intensity which ahead to growing

QX meaningful fiscal to double-digit Dickies goal in margin strong to the efficiencies. to Importantly, in improvements, expansion deliver gross Work has segment driven by and of SG&A start brand XXXX. a the margins profitability returning begun our profit represented both

supply scale VF's continues with with a of XXXX in on happy confident $X.XX continue our strong demand brand. and levels. chain couldn't in opportunities year, $XXX relative signals outlook performance particular in time. QX to which the opportune our we in fiscal The growth update with full-year come raising XX% Dickies XXXX logistics fiscal be a the the into across teams process. are integration for more relationships, from to we outlook leverage the remain advance accelerating over and quarter representing quick channels, to to and we teen Supreme Supreme million organization the One engagement Following A brand growth mid fiscal capabilities, confident

from against associates XX particular our the turn our to to the tirelessly over want functions around to I been Before call thank our with Matt, who over have the months call enterprise minimize teams past chain disruption the a and of world, I volatility. backdrop unprecedented out across to working brands supply

consistent continued strong recovery passion dedication This Our teams in the underway. strong acceleration ability reflection work VF's and results nature broad me energy execution, and our are to around based great continue of of our of world. give the confidence the inspiring the hard alongside driving

small year. over first the of turn And a in represents starting it great this momentum year, up portion of we're While building XXXX Matt. I'll our which off total began the fiscal now, to quarter February

Matt Puckett

year. Steve. our strong results and happy on you really everyone. I'm morning, the outlook to revised Thanks, QX update for Good

to our by to our confident remain business the in up build heading encouraged across additional the the into fiscal supply earnings momentum strong pressures chain. of each are recovery I Despite for heart big execute throughout year. our global continued in the We brands and our broad-based ability QX. and of the on team's set delivered

conversion. closed an with our gradual overview Americas, regions. a alongside in operational. and strong of encouraged all start the stores strength the and have less the operating increased quarter traffic US vaccination the continued across were beginning than environment rates of The restrictions, currently at me Let consumer, In foot easing are X% recovery in geographic of stores US

the trends benefiting surpassing promotional and across order business the our and drive in business marketplace, DTC expected performance the by our for strong organically than well and to athleisure direct XX% Americas quality accounts. in outdoor categories pre-pandemic for spring stronger sales recovery sharper upcoming a and athletic as levels, improved sell-through business. of Consumer grew QX, strong resulting in Our led as remained than and is appetite mortar Low our which down key activity of fall expected books inventories continue seasons. brick

XX% relative organically fiscal wholesale activity economic while has growth XXXX. DTC to returned resilient. to remained affect channels Moving representing QX, to onto the growth in region, to XXXX. measures EMEA relative our continue and lockdown Both Growing business XX%

from partners mortar About direct closed have first both the channel As the offset our the more digital and continued strength than store stores and of were digital our start of closures. of from EMEA quarter. brick at impact tightened XX%

have As restrictions as reopening. we those of brick sit performance from now seen and strong fleet ease here reopened. we've following Consumer doors is today, improving all mortar confidence and our

For of of X nearly example, months doors from open representing XXXX. following our UK business growth to growth delivered XX%, lockdown, relative fiscal triple-digit

our the region virus sporadic to continues despite Finally, APAC double-digit of growth across market. deliver many resurgence

grew in QX. by into from QX impacted timing a was XX% which shift business of China QX, Our wholesale revenues

have teen impact, this delivered China would Excluding quarter. this mid growth

growth ability in led China digitally XX% deliver growth the We our region, fiscal than in in XXXX. our to confident partners continue particularly in greater with tightened remain and to see

Hong pleased APAC while in vaccinations stores key we degrees manufacturing and factory travel wave global activity our performance remain to-date for China chain. weeks closed are lockdowns Asian and widespread countries with APAC markets in observing currently across market of and additional our outbreaks near-term our about supply Kong. uncertainty temporary various X% recent sourcing This been outside While also restrictions and more lower virus impacted lockdowns constraints. are most of capacity presents In we facing levels commercial Southeast of with of have resulted most latest only has

chain other we has equipment also varying most. every managed challenges to logistics to while by last XX not Our supply we're over in degrees relatively impacted availability link the this, impacted we've supply the continues port chain been immune months. And Essentially, to better challenges. be and than delays, these believe

to way. delivering signals and most demand focused remain teams efficient satisfy on products Our cost the the increasing in effective

air appropriate. shipping means the where of dual sourcing Some actions expedited include freights, of using other and

our to we growth remain While service is there our a actions. ability strong implications these confident financial in plan, to

competitive $XX we expedited are more over XXXX. appreciation million I this fiscal spend to key relative supply past We Steve's than of and is freight VF supply advantage more expect chain want for chain proving execution teams example, ever. to the to For than echo in XX view teams' our months. the our charges now a incremental incredible

navigating result of a to effort, confident dynamic environment. their I and As tireless ability this tremendous continue remain in our

pre-pandemic financial QX $X.X expectations. to VF revenue initial Now, ahead increased or levels of XX% organically quarter one moving into our our Total results. XX% billion reaching

Our year XX% QX business is fiscal digital above XXXX organically, levels XX% representing a two CAGR.

performance relative driven are the expectations. to When to the of with We through EPS the VF margin XXXX QX, air flow fiscal top relative digital the We benefit, FX. generated mix also of XX% continuously line meaningfully compared year. strengthened our fiscal from key margin representing quarter digital and raising outlook. which play X partners strong in was by the to pure of fiscal Operating incremental QX, XXXX. broad-based times revenues XXXX. $X.XX our penetration our QX we first XXX% about a as price expansion by gross total driven penetration costs sharply partially wholesale represents growth quarter. gross and margins, our globally basis wholesale points X.X% a in expanded our full XXX from of last expansion to earnings in strong over delivered strong expanded stronger digital mix to growth roughly margin Owing greater margin gross a offset full-year offset XXXX. costs selling Relative partially levels organic relative fiscal business by freight QX to we expedited representing peak the XX.X% to leverage XXXX year, rebounded strong Gross freight organic SG&A and performance to prior the driven in from business by and initial by quarter was

fiscal disruption outlook increase XXXX. least growth to today to mid-teen to changes prior XXXX from peak our at chain revenue significant the supply is assumes representing no operations. XX% now in $XX to increased expected at and VF's Our including revenue our least be fiscal environment, relative billion

growth outlook Excluding X% the to of implies least fiscal Supreme representing fiscal least organic our business, XX% XXXX at relative at growth organic XXXX.

portfolio, covered, outlooks Steve based stronger to emerging and core brands, guidance our brands the of of and revenue each As our is the the for top increases in SmartWool. sizable Altra across broad our two increase

order DTC improved supported past accelerating the outlooks Specifically, the trends are by observed and books over the stronger-than-anticipated months. we've five

assumed Moving XX%, down headwind be our point operating still expect margins over additional a exceed points to P&L; to a of representing wasn't least as relative XX point airfreight accelerates. XX XX least we outlook, outlook. Fiscal initial gross that to basis $X.XX potential fiscal to at an now brand basis now upside We basis to model earnings margin XX% contribution the initial improvement be despite in to of from topline expected XX% our from per XXXX Supreme signal growth from including XXXX. least $X.XX a at their EPS share the is our at expect to

planned continue billion to flow deferred fiscal spending generate operating this cash as about from well year the to capital as with of including investments, over growth X of million capital $XXX XXXX. impact expenditures We expect

These As this closed June $XXX million announced in providing exceed additional liquidity proceeds Work Occupational to reflected liquidity. XXXX of outlook total roughly fiscal business on our XX, for of $X sale the are billion. the quarter we

between expect optionality moving term to exit X.X times deploy providing times meaningful We this and forward. capital leverage with excess year net us near X

our provides the drive last strength with continued sustainable moving our a of We begin we're And me remarks, optionality recovery, broad growth and the that we underway. brands decisive recovery currently long-term balanced our broad nature in to along position forward. model our confidence extremely strong gives this with across XXXX. ability conclude based fiscal actions year I'm to pleased the as based to portfolio prepared enterprise seeing So with our the bold took

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

Operator

Laurent [Operator Our is today coming Paribas. Exane Instructions] first from question Vasilescu from BNP

now live. Your line is

Laurent Vasilescu

Good regional I Thanks to morning, for on morning, wanted for It Vans my year. to taking should X-year Matt. digits the despite about think it's the question. was that the first the like performance but a a like stack looks guide go nice toughest looks And it but And see the might this was you raised wholesale. between Steve. compare basis. is that I think raising a is and brand. the X-year Good about How we second have for guide on Vans, Americas, rates single halves into DTC growth up annual the wholesale on stack been ask within is Americas or here, you minutia are the if then certain I have and there based timing case? shifts the up,

Steve Rendle

got in Yes, Laurent. lot that. Hey, you a

we'll try it think to to talk I So make yes. great Good sure all. through you and, to morning get we

out So and the there, particular let perspective. in you as saw really in result in also it with what our to business direct a me we're the from of laid saw that in DTC we Americas, certainly the sequential happy in start we terms QX improvement, in consumer with particular

some was the $XX all we've that impact terms wholesale in So the of about results in standpoint so global up really growth encouraging. million, timing sort There the of QX. caught that that's way, terms impacted points few was July, that quarter a that was a basis of, on of in in shipping from by in -- a

XX% beat what a is start. to order And fact from -- I we is perspective, in point relates are we And by So partially was wholesale our on all QX really our we're here way, primarily the doing we've book 'XX. year-to-go good DTC extrapolating of that -- versus Americas. a the most off would seen. we're about just as dialing say that in through to into would would that in that fiscal July half, most some based again the the point basically Americas, the to it flowing to outlook, first are trends that XX% your terms of QX now we're outlook growth what I I seeing, again implies the stronger about half-second you that

everything you asked of details. some I that, I the terms in with So that there hope think of get

Laurent Vasilescu

You the think of talked did, EPS. on how shape the you Steve about to XX Q&A on Thank thank half for Can how the gross on guidance. Camilo think, call think maybe half first and about you do impact between guidance much very first Matt, of XX questions we me, and from the margin bps the, about half $XX we second you about but that -- and annual bps on incremental remind I a Matt about million you. Obviously Vans, giving talk freight the GM. during I asked last the think couple

think around just first to it I was be, impact about of of the size the a half due do of it $X.XX magnitude just think would the how EPS? we

Matt Puckett

of we're of hard and Yes a as to to it's we're going taking and we given amount will the as the perspective. the call to wholesale really But quarters. there's so of is we load specific the really mean for between holiday give a you near in I term. that by the activity I let to chain September-October hardest quarter-to-quarter would me outlook call in Remember, remind puts from always just think QX And to bps the evidenced continue shipment significant time pressures first today. certainly confident that timing the can on outlook some I supply things during and period up takes I fall all, up. the side not expect would, volatility degree, our year timeframe begin

to ultimately today fall you perform have season. remind as However, I'll And impact done better while not as that that the we a begin relatively though we season know optimized expect the with deliver we set. competitive ability we of some will perfectly we on holiday particular, in the meaningful what don't our flow be expect continually the may we

year at expedited higher and forms what freight freight. fact absorbing margin, gross to greater of freight, would we're talked particularly that about relates some air the holding than other we it say As we're I is the XX, certainly

the remarks the meaningful think to play tell actually to will said in basis XX out. that that we is our original a outlook, basis so of I XX we second I majority quarter the our would points in versus amount, vast in points sits prepared you way expect that

around against remind thing will point you that we other little have later The probably would as begin headwinds year a that bit the up through of pricing we abate I been gross make to margin I currency we would fact which we spring we're in that spring pricing limited 'XX, and last the move the as significant about our relatively that and move talked fall 'XX actions, have into impact you'll 'XX. see more the activity

So the as QX will well. that little benefit window a more from bit perspective

Laurent Vasilescu

very Thank of much best and helpful. Very luck. you

Steve Rendle

Thanks, Laurent.

Matt Puckett

Thanks, Laurent.

Operator

Camilo is today question BTIG. from next Your coming from Lyon

line now is live. Your

Camilo Lyon

Thank you. morning, everybody. Good

Just what business trajectory at seems versus to we at trending business can inventories environment you the over in as provided price implications -- about the the this the that a basis. you're of now in demand and it provided going detail looking limited deliver to term global of and those be how accelerating 'XX, think do EBIT Beaver like the sell-through, really you Creek, margins full long on

Steve Rendle

and good certainly see signaled which we're say I really play in recovery of that I sharp guess certainly we've certainly we by we the first and is all Yes. encouraged that QX, Yes, in to margin saw anticipated happy gross but what today would out. Camilo morning.

business peak above our in organic actually As prior anticipated, terms of levels quarter. underlying in the in the first margins

play in obviously to our expect seeing think call a last relative you if through to so, least you it opportunity at bit to the in the -- think leverage of outlook some strong we to that headwind I could at in really we're and come And earnings raised about operating that our could speaks out which a what I XX% Europe beginning calling play calling a -- flow earnings confidence that's think result you'd that that think-- that. in margin pass given as freight up saw to air said seeing We I the SG&A out. we're

again So supply relative we've out that anticipate headwinds side freight despite we the I think fact seeing play that got the that May. didn't on some chain in to

Camilo Lyon

global is it. second back or my the the question And global the regions Got on, regions to rather. going

APAC in slides raised raised the You you as -- the but Americas, Europe the guide. prior and same kept your you

Given what you're and you the talked you in demand about EMEA seeing and from have perspective would APAC particular why raised what regions? in not meeting in growth Europe in a China,

Steve Rendle

Yes, good question.

me of all, China pretty be volatile got rest So really the but APAC. is given continues let start of Asia first in to strong, to moment you virus. remember, flare-ups at

So an some there that at of business, of Asia. look when but our you enormous across not region it's part is total I'll impact what call rest

I think Japan, et cetera. Taiwan, Malaysia, about even Singapore, Korea,

as strong how So, and laid on about the too guidance the out and think initial the think of Asia probably we with be terms side business there conservative. Europe play we about there's here I quite could puts been be and it a little our takes opportunity, a when in in probably that and the bit May business talked to -- continues little

was predominantly in that I related think Americas comments.

broad that's come the well. the think business strong. strong out business in That's I way. big the to as of by we're and from the think seeing important the mortar brick coming consumer really obviously particular comment playing in certainly a that all the of size businesses business standpoint across our Americas across our portfolio based US our as of consumer I business So back we US across critical and the as the given here a as go-forward well the Vans back it's business and US in size And that's see

to perspective say, thing we year-to-go result for QX. cautious still that's are improvement I we us. expectation, in a would from approach got The a our sequential a So maintaining we've last as business, really consumer stronger coming obviously saw encouraging our fairly in direct

terms QX, we bit in there As I over out into of remain extrapolated time. that how said, will play a that but we've careful

hopefully So, that question. answers your

Camilo Lyon

resurgence It of in characterize Maybe stacking Europe the that, does. in a demand, fair as it question I have the quarter accurate a being fair that on and clarification how depiction? of terms behind maybe US kind a is is just to you're

Steve Rendle

business the consumer beginning Well, the quarter of through we quarter the quarter we're been terms of significant fair now, a I has over closures, would good the say I the here those and opened door as with closed in sit and closed through, business think fact a -- were really as of of here that our we're many third today. all for certainly, quarter in in half the the and we way and to close half open it's open our doors the we characterization Europe were

I from confidence, a characterization. that's think So a fair consumer standpoint, consumer Yes,

Our all really business was way our resilient, the the been in that through a good stack actually Europe on two-year in and quarter. business has up

Camilo Lyon

color. for it. best. Got the Thanks the All

Steve Rendle

Camilo. Thanks,

Matt Puckett

Thanks, Camilo.

Operator

you question today JP is from next Matthew from Thank Boss Morgan. coming

Your now is live. line

Matthew Boss

Great, thanks.

the year, North just and could trends to long-term order on the basically speak that help Face, drivers So which you business of XX% XX% this to seeing increased your the maybe you're outlook in target. doubles

and those what the Just seeing you're confidence targets. in in business

Matt Puckett

books order is more be Steve of channels. really the our so I'll is morning, through geographies sell blunt of bit across across related it start and And let are to has is, outlook there. vast North the in come that encouraging business I but Face the the here what's a Maybe think order good. to probably talk across Matt, the trends are order I'll book be Hey strong just and to majority good, the honestly, good US up and continues

in book. the that's that's things that get of a confidence doing -- would giving really we're that's consumers really the us obviously with that, that resonating that order stronger sell-through, strong So lot

there. add Steve, So anything want to you

Steve Rendle

a that camp, and had Face in validates a categories effective the the with team is nets built brand around just year results giving really Off-Mountain and internationally awards very our ability outdoor Yes, one which talk really see see the to strong the drive has outdoor But us brand building about space. relevancy position different energy, last really this I number of say and of magazine deliver segmentation be this doing, growth across balance in On-Mountain North proud and been products, the work in North we that Matt work very Face's see within done, the sell-throughs And just the of one the good strong would that our year. between very for demand by led collection the Face China is and evolve validates FutureLight to and with also year great the for strong quarter. momentum just continue two carried that's on the and secure. North for getting has us focus you've the XXX growth it's specifically footwear our day the it's the This outside triple-digit logo to we outlook. team the globally, into here, heard a footwear Europe strong really to being the the hence, lot of in lot brand in the sportswear to offer, referenced sits global Two opportunity the able raise based that a there to to wear confidence

Matthew Boss

then, that or more us to there forecast. one-time to is to see maybe expenses you how And any follow up best line expense five-year Great. transitory to the this change on Matt flattish think the And about year. just

which I just laid material sure on -- years in right. I two the think thinking this, SG&A out, about would next the pretty drive leverage making think line, you we're

Matt Puckett

Yes.

SG&A think short Certainly, the some So, there are yes, in there. headwinds. term, transitory about we

I that think talked about a hasn't changed. bit that. really we In and quite May,

the where some out of some cost, we've specifically a we think in that pretty significant costs see I the increase. freight freight of seen

is a couple costs distribution We've the as board we term got, the bring that demand, new distribution. short we're capacity capabilities think in as some I the of in distribution well center the and new here one-time navigating as in our on a in of supply in UK. as around as new lot the well that US places

move sort we're that. quickly that go to past that of lap through So and

So some certainly I is headwinds. think transitory there

all, As original to the that really QX results it relates see our said expectations. to happy first the leverage we've versus there saw of is longer-term and we our we that right and view, what expect,

some of in the Now, certainly timing. the that related; we'll timing of spend spend or say, terms shift

bit expect we the we expect of said Some see out we of little and we've happy SG&A to said kind year to progress, shifting -- a that that shifting to with exit but see leverage that towards of overall Beaver path. will sort the back we algorithm sort path that track we'll year be that the long-range next on in of be out mid-teens with margin right that and laid operating on Creek,

so, And the you of that sort hopefully, gives the you're context, for. looking

Matthew Boss

of luck. Best Great.

Operator

you. Thank

Michael today from Suisse. Credit question is next Our from Binetti coming

Your now line is live.

Michael Binetti

on just Thanks coming all the you talk can in that in what's little are from in increases Matt, It some the see Vans, America. where few. helps about and I the order I guys. really understand a changing guess tell optimism book Hey I us help a guys, thanks. you bit, that today, North help for business. have

the ago. someone would helpful in was, bit were that looked book maybe North to on like understand be little XX it relative but in where think the wholesale you really a there increases on are order days impacted of first come earlier, quarter, it wholesale particularly to where in a think shift I touched I America

Matt Puckett

Yes, would honestly good morning, broad-based in US by, across a it's I own in as business, and the market we continued see the right. really driven just We Michael. sort of saw stores. our it's improvement say really

to coming lot the is well a as inventory stores, from fact are back-to-school. into that perspective that positioned of back spring, think through relatively guides I into head coming we're and we an consumers

broad channel, performed in again specialty key of based. that's seeing of our seeing And so to seeing the some with We're sales ratios those that we're sort well and the stock partners. national quite we're it

so more X seen hope you the based are broad out occur lead volume that to we so stronger times orders after So as to it place, of I playing there and we've in would get said, sort taking we opportunity windows know little business is. based. and that's and have Vans a think order little as And don't it's about it's think tighter out meaning shorter our relatively months on X we're the I any one we on came it the and if

Michael Binetti

competitive you comment of the over here Vans top you off thought seen the -- and see are bit a at And just strong made think next the at you and having then, rates the at little quarters look few you as expect quarters? reflection in would I some XXXX, that very argue that. you footwear are lately what comment remarks next prepared the Vans Vans in many against of brands set I comparing growth behind top guys competitive could you you more of to me that think was we of the haven't the tell few report in to XXXX of would the Vans being But on yet guess maybe we be set I'm the trying a over we

Steve Rendle

This is we see see here we that which demand positioned is Vans to competitive impact our the certainly we're ability Steve, forward the but inventory, a lift the chain's that that. the I'll and DTC the Where also really having keep lift with and opportunity positive morning, to at really the supply against seeing. high Mike. see within Good level perform our to set ability service take is wholesale

nicely is encouraging back if are an ability with replenish last required our momentum that You as comment we supply back-to-school what see about outsized carrying came and us today. building really call, -- back and trends inventory frame back-to-school chain and the here. about into remember ability that and all here see we I The is that we're the the our opportunity set having might for inventory the about into in with time on significant consistent sell-through board demand really to DTC and chase talked

Matt Puckett

those versus are really Mike, that set, thing really part is the talked that store around there also maybe associates ambassadors. competitive retail retail the brand the and right one we've I'll of point that about add the about our stores in teams

a to quite honestly part -- talked of big that, and last is large that's stores throughout which we about that stores, as sort that's going open not just in buy play us consumers most our to for get bit the the robust not the in know part our oftentimes stores back year the are closed as so of stores, opportunity been ecosystem, that challenge we've of overall of that connection you and were but experience a As advantage. stores is in are engagement having to and a in the those a the

definitely that's the of feel that so part we And thinking how terms versus competitive set. in of

Steve Rendle

associates drive, we're aspect strong seeing little last the conversion that them slight teams another pile we seeing. retail the there I'd and not benefits the historical And through a see we're talented we're actually bit reaping that's we results year of by a to those forward rates outperformance Mike, on our and of that but furloughing that's supporting currently that DTC carry

Michael Binetti

lot helpful. a thanks Great, that's

Operator

you. Thank

is question from Piper coming Sandler. next from Our Murphy Erinn

is line now Your live.

Erinn Murphy

Good versus complexion bit composition a your you key digital. Great, Dickies. I does to party Can thanks. today perspective, wholesale terms follow-up And of it pre-pandemic Steve. from then pre-pandemic the of about partners, coming back prepared remarks level, levels. a morning, in almost the the you talked about between more wholesale how third about look Thanks. a mix have in on share

Steve Rendle

of the Erinn. just there, line follow Yes, your question Okay. I'll

critically here in our the are as we the partners, wholesale accounts coming -- European talked and outdoor strength QX digital -- energy goods we've the partners our and space business key of wholesale QX brands Asia seeing get lot of space, demand in but that key strength we pent-up about position important in is that in think that to those a driving we're performance. component -- our and the I sporting a out as we digital some seeing our is we're account US of key the accounts saw into fill

Erinn Murphy

really Americas all. on incredible about as Thanks. here then you you Got topline the Dickies, incremental in share coming it as share the the on China. can more both from growth both see And I the a bit been some where in great. from margins, mean has gains well

Steve Rendle

grab revenue. Work XX% about COVID. of despite strength We're in the now outperformed plan even We're this our we're seeing excited [ph]if States. component, brand will fill but our nice in work has blanks here, seeing total the here about the business acceleration acquisition core I'll and the in Since Lifestyle that's Matt United really business. significantly acquisition, our one Sure, Dickies this needed and in the

focusing So Workwear. that while the this team to really business really their years lifestyle icons piece the two over business the out simplified building respecting approach core their on of has last core the

component. the also core opportunities to giving image see the is goods. of expansion elevated that we to in point built of just that better of are recently on skate collection collection gross sporting really host off new Collection specialty offer. It's Signature launched great The skate is brand going accessing them beyond which point icons. channel growing those accounts launch elevate work just price a We've margin building of an we some permission core of items, have the sale, which whole recent a We those is higher

speak I broad-based it's think I the all of just, -- the to It's our to they're based acumen extend because adjacent traditional they building partners, but momentum digital now So directly. able same at business. while channels, of we new into consumers and across broad wholesale build its the channels the point think our time here three against regions distribution ability to focus is,

Matt Puckett

And the [ph] things the spend give easy to teams the to Kontoor sold about performing asking and impacts Yes, Occupational but had less Dickies, thing to some the doing teams the connections credit which it that are there for thanks a on is sexy had in really and to of we off job, brand back all doing end Work, and of were also because great one maybe make the add a the that of didn't important. after acquisition, maybe little we just business of we there. we

lot fits and chain some days, to are through as of starting integration so the momentum time, brand from in we of planning, to the key a business the really now demand the but activities service an the the example, helping way benefits supply ultimately So at perspective. a had that's allows a certainly around there we've see better too, in us in which obviously some same there's while early starts

those coming a is punch. So think I of one-two together things sort

Erinn Murphy

much. so Thanks

Steve Rendle

Thanks, Erinn.

Operator

you. Thank

Cowen. John coming Your from from is next question Kernan

now is line live. Your

John Kernan

from for North and from Excellent, I my is you this does an higher back the Vans year, where on to margin wanted a commentary sit brand gave back go standpoint, then mid-teens contribution Creek Vans, Yes. question. pre-fiscal helpful in where significantly every and other it impressive Where profile said margin in Beaver taking in think portfolio. is a was relative some margin was overall thanks Face in I to for to which it the business recovery. 'XX you that

that where fiscal and you and curious sits going XXXX in beyond? now where Just think it's to go

Matt Puckett

sits It brick strength it's really, gross in that in think the really, strength really same driven above margins, right. standpoint and brand still well I mortar from a of profitable franchise. Yes, spot the most from portfolio our the profitability direct-to-consumer business

fully until as seeing of and still fiscal sequential my recover through, That be we're thought. move even seeing year we we in the the our stronger early was be not year. earlier and point particular to really conservative brands If freight brick modeling two of little where across fairly dealing down we and in half improvement really you fortunately We're 'XX. a that while and mortar that levels things as outlook there a things, but of think because while thing the pre-COVID headwind side brick we're one are about, primarily is our one there would too, there about, than I all is I significant. And the business of remember one bit say a mortar with they're that's mean versus still the little remain of back

about yes little profitability historically talked value longer-term terms on compelling but, there short a outlook would Vans we've and the in basis really in what seen remains, of a the term, that and Creek you it's overhang creation. bit there's that Beaver have in So of

John Kernan

Understood. the Can And indicates a and through of talk Face pre Outdoor, sequencing COVID the guess to you're you growth you I recovery. to then just North can 'XX we fiscal going levels back year. as giving to off talk the nice go

it remainder year. thinking the guidance the curious QX, about both we're DTC were above of Face go we as was where you wholesale the year think for North through in relates as to remainder and how so just I of the

Matt Puckett

US to what sequential window that, perspective still a to timing as to I'm strength the going the it's of improvement both be be some Yes. standpoint that is thing but heavily strength weighted we our a as the holiday specific to last that through order Yes, fall think as volatility toward fall not you year notwithstanding shipment a business from I the step book and peak remember result from in quarter, quarter expect can we of in into Europe. holiday. could and around some, shipping Certainly the profile move and performance the wintertime and there year begin sell-out

that recover kind see that's bouncing comments sharply to and growth as about business part of as sequentially, big wholesale of So similar business back as continue consumer the see direct a to we there. in Vans, our talked we we

John Kernan

Thank Understood. you.

Operator

is next from coming Drbul from question Guggenheim. Our Bob

Your live. now line is

Bob Drbul

Hi, would better on us good guess bit with question. than any we early so share learned anticipated. great. you've accretion love the to Thanks. I think for the could I morning. learnings, Any the probably Thanks hear I some Supreme, taking what about plan, far little the be was commentary more the update, integration, would a game you

Steve Rendle

good morning, Bob. Yes,

taking we're the that Supreme allowing tell you of would happy we're progress I VF. approach integration. first with learn really so The to our targeted opportunity really about thoughtful the And

and business have growth VF those stronger expectations expectations The about to seeing for in versus Our performing targets we're business. opportunities teams, the and to brand where the long results with those is Supreme our capabilities. provide learn that the line the we ability are -- range

team where their of come couldn't our think specifically Supreme look team supply to the chain we drops our assure that and business, most it going understanding our the partnering the, early, and plant, -- shipping value expansion put the but -- to in about as and in with we're close capabilities, capabilities. as confident to weekly so in effectively teams skills work leverage regional to business and connecting and continue the and to assist the time in the at stay leverage for the certainly I scale with it's to with we relationships of a most long-term leverage possible cycle is as couldn't our partnership creation the in certainly we're probably our seasonal very forward thesis better see logistics Supreme

Bob Drbul

incremental supply the Vietnam seeing sure the And if bottlenecks product quarter margin Is coming can and to freight. just incremental in guess that just is guess China on in is incremental airfreight. demand of if the just the -- trying I it you air go do incremental add a on decision or how just I the you the to pressures or function in Thanks. from we of back expect Great, give have that you the to idea an make to the expectation terms thanks. the chain. us you're the long meet in

Matt Puckett

so the we're certainly ensure be -- we against we've way, some delays certainly demand is where Yes, we're that there certainly makes given spend that chain. and Southeast are here said in expedited it for avenues you, airfreight some in not ensure satisfy and standpoint I a seeing what the what, certainly looking seeing but is we're to dealing delays tell us posture we and we do that, from and Asia the particular. months, to going other demand with a supply going optimal taken can supply weeks environment generally business we the that chain strong, will in the most sense, we're to in it's in we're freight

factory XXX% those think, working not I be. of most is a to the we not understand Fortunately, of will we that's we we're things the the base flow able anticipate some from by really to of deliver operational and obviously holiday. earlier is operational be I certainly expect what going it's through we're maybe as large, fall and as move again most the it and impacts standpoint but our to season where support hard said for business season. beginning at optimization But ultimately And

Steve Rendle

pile And here maybe to Bob. on

own in share using expedited because our we current our think wholesale we advantage the our think opportunity our of as operational and factory do and we be in moving are think to We to of at but capture operating there grab we forms well. key full their position capacity certainly I our own position with certainly e-commerce, brands, have airfreight goods, to look with as and our capabilities because distribution, some of at but capacity. not opportunities see sufficient cases some partners an to other a with partners large opportunity there share strategically DTC work at

Bob Drbul

you like you if Steve, you are orders order you And on you with original meet brands. follow still demand the across because are taken that books just up can have your feel saying various working that could additional or the I

Just trying to understand the dynamic.

Steve Rendle

Yes so, the serve confident books job demand. is an the not supply really things VF see and is one we -- that's We can know largest because to the capability but to -- at but that. win life. whole where able is upside additional in to order our is part we exceptional looking where our difficult this really our chain very do and advantage freight critical fall supply is and initial We're opportunity expedited goods fill in about brands built and to in the as our see to playing really as very that control not because -- some to This come be environment. outlook teams and least to it's demand ability really going not are amount, this reflected strength and being order portfolio to only of a demand you teams, ones well our we it's of of that, compete our This did come here we an across to talk environment, but to is of those going recapture additional a within that our in easy. kind in is to demand about our -- airfreight feel there to share be

Bob Drbul

you. Thank

Operator

Thank you.

is Robert coming question from Baird. Komp next from Our Jonathan W

live. now is line Your

Jonathan Komp

thank Yes. Great, you.

business. assuming guess are indications one maybe you globally know reflected DTC But you're the is the for trend order about and I into DTC message. DTC the target. does your you for continue about clarification the more full-year the raised how Vans have own I thinking And first Just currently you're thinking or book that you positive outlook. not seeing

Matt Puckett

sort Americas. projections begun to Yes, QX saw what is perspective, think I our done in in particular and we in uplift what particular a occur business Vans certainly from in particular we've DTC the we've of Vans in we've and QX, bank DTC in

direct-to-consumer true significant those the majority in reflecting we're that's think the across business. it's business statement So that's trends some of that of I but the Vans most

So we are doing that.

in haven't I think the point the just revenue back in we our what actual we last, of to half year. have in pretty the cautious a -- perspective the we been last assumptions in the question, had we've done, from

reorders. be additional that be even wholesale potentially own of our a what in but we whether those inventory to changed stores from some Vans just capacity or making, we done terms particular really in are Steve was there that leaning frank, haven't point have little is for upside, We an the in in in to bit perspective create

beginning standpoint business from some an in aggressively So a as we're well. to to little posture more and Dickies our particular lean Vans in in degree inventory in

Jonathan Komp

plans in really question think drops on more in about I'd That's you've And I in And curious going newer follow your should on incremental learnings any you. from from those approach the up that. Vans, Thank marketing be then product helpful. attention you how Steve, focusing we the if forward? Okay. could recent learnings areas the with any have months been the one Vans

Steve Rendle

broad-based about visibility allow themselves of and to Vans the time limited we've collections based model we capture to in do that and drop of just It's to year they that that be seen to that everybody an moved -- the question. Vans. to out that publish for to coming some manage the they're drop weeks specialty We're you Thank point consumers very development for drop. have be something here of queue of based providing play Yes. idea model SquarePants team begin be collection remind a recently -- that products. frenzy visibility select available But drop the XX broad Metallica about the really and week so and is, in distribution the most just week, every global extremely for visibility from possible about the something seen and they this on they -- they're list QX, broader giving see will week to the learn and quickly, exciting or they pivoted some us how across will it you're of to This marry that's bob is a heat if X more this visible like and just this understanding and the give to get and refining predictable What think that flow learning going lever a do key multiple type be true or think that -- Bodega[ph] positioned and drop. it's could a very our well. drops, operator consumer is to a enough be create to storytelling, act we've product dropped the are start was SpongeBob brand to the channels in really more the offer only how fault for the content excitement what's and the retail it demand use it's in, product by how the of itself bring if really reflect will versus key

driving really just ultimately is evolution well-designed, this what a market think demand this loyalty. was already thoughtful I consumer consumer but and is about heat So, to increasing brand go-to a and model,

Jonathan Komp

for sounds innovative very That Vans, Yes. much. like you a thank very brand

Steve Rendle

Thank you.

Operator

Thank you.

have to session. the will comments. back I end our for the any turn closing over management question-and-answer We reached of further floor

Steve Rendle

us taking be teams our Thank to us deliver couldn't quick. you we morning. real everybody join for would just I time So prouder quarter. an outstanding the this tell just of you helped and who

and and of back regions, our our that than drive standpoint to to just to value that going to is to things meet on COVID to slightly from of and It's to against stronger remain hard expect. and the but both can a committed where drive work earnings we through shareholders The our be originally is year very impacts validation we're control parts demand, able power that the across consumer back supply the brands, for that is and to continue ahead business ultimately focused where strong growth the a revenue continue chain. your coming back towards but We and we're what broad We're the related those to expectations, going we thought consumer meet we seeing of despite you that a continued pre-pandemic channels levels recovery. delivering we drive to also would model. be see based

Operator

conclude teleconference does today's That and you. Thank webcast.

your have day. wonderful today. time disconnect may you You line We for this and a your participation at thank

V.F. (VFC) 30 Jul 212022 Q1 Earnings call transcript