VFC - Earnings call transcript Q1 2023

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

Operator

Greetings. Welcome to the VF Corporation First Quarter Fiscal 2023 Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] Please note this conference is being recorded. the of to Investor turn Perry, host now President Vice Relations. will conference your over Allegra I Thank you.

You may begin.

Allegra Perry

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

You for based completed June cash today’s call and U.S. is and amounts, may to amounts found also hear financial items, in flows Workwear company On periods company investors. operations. results Unless on on in XX, its the the XXXX, in continuing otherwise through the operating results sale. identify of to the release, operations view and the the excluded Occupational has discontinued of sale all Reconciliations why tables the can are of which GAAP date business. noted business reported Accordingly, GAAP. accordance of all the this quantify adjusted be press supplemental management’s reported information measures are which in of included provide us this refer to with useful

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

visual our presentation to quarter’s remarks. designed been aid prepared as a This earnings has

webcast our option follow presentation via available the portal. on download You the website. slide in have the to along The also window to is

for questions. over I open the Steve. prepared we remarks, call to hand will our Following will now

Steve Rendle

I And I you review first for mid-May. an which by CFO, update afternoon, to call. operational performance of joining take want will the a thank of earnings followed addressing the business, financial evolution XXXX Puckett. environment macro in our Good through our our by by be our we Matt everyone. start you will last quarter since fiscal of met

Excluding health markets. China, good our consumer across generally is

to were the first that be won’t and more sentiment changing to to choiceful limited be near-term. very From to this spending I of majority out point the of the on the demographic distribution. marketplace being we in largely we confined our where leading positioned value impact cautious Although, have To-date, of exposure. who in seen view, consumer end see has in point where has being person behavior our mid-to-higher amongst and end are softened the of forced consumers terms the brands little VF their

strong We high across than greater well a brands and their VF resilient a the that performing have portfolio, have number family ever before. segments and positioned are of today we respective brands within of

gain and opportunity in momentum in under good we the Our certain maintained TAMs are remain areas, further healthy markets. with to and penetrated growing share

across to of capabilities consumer creation points. brands, and the to We are all products and drive in continuing invest innovative engagement enabling enhanced loyalty our touch

digits. basis, impact at our strategic our our our the of ensure We billion, across fact, a headwinds and ahead of and business competitive grew China, China, this reinforcing excluding QX constant up on To initial capabilities, marketplace revenue the drive in delivered achieving mitigating healthy are the well-established in sell-through COVID forefront in are family a we the with and dollar minds. while advantages. to faced of persistent of topline and low-double working platforms partners consumers’ backdrop, closely $X.X we retail Amidst our remains performance of X% expectations, brands

the The amounted of grew to with returning into the X% then the Timberland. brands. brands Face North big will I I’d we and which identified. the in by committed $XXX we grew to highlight in teams portfolio Our to on more diligently that remain like scenes, led quarter. Vans, our brand’s key like start XX%. are details take our on work the the to aggregate, update have underway, to to cash go of shareholders Behind And to I the into a minute The with remainder working details performance. million go I’d four you address lastly, headwinds before dividend, the

macro which owned our Vans first Taiwan out brand line was on Driving store the disruption. COVID China, with largely challenges with sold with energy which completely in new along in app. June, opened We in Brain collaboration a its reflecting First in engagement, cautious first Dead launched expectations, hour. mobile [ph], and the

rose and last Our digits event and versus Douyin expanded the by X.XX shopping was year. Duwu mid-single platforms onto

of Tencent of virtual on for partnered our phase opportunity with impressions. confident XX Finally, Medivir’s days one growth long-term We has XX Vans four in the China. and remain activation we million products achieved in

music The ROI positive improved Second, strategy venue. London customers ongoing launched Classic over core with the on of campaign with of Vans Paak, our from early views a live to efforts our seeing response million House Since including is energy and XX our in Forever at stores performance we two Vans Phase-X classics around our the showing live from five Anderson appearances and first rebuild of influencer campaign months, support globally. are signs icons. in

in members some XX spots. last growth in heat nearly platform X% increase saw globally, reaching nearly The Brand XX to We bright first versus Vans’ signature year. QX family members product sold million a our represents show online dropped XX% has begun hours. on which out versus U.S.

Moon online We exclusive also generated pre-releases. sell-through and Stranger collaborations, Sailor Things of customs strong including

pre-launch events was event X price tier unit sales Fashion the of for sell-in The hosted with customs coming We since in-line our twitch through launch business in Freshgoods live biggest holiday. Paris A stream Things resale Dead Week product launch. market. Potter a new early Joe is Stranger average collaboration including in clinical Our quickly launch and top the September. Harry Pinnacle will second times in at Brain a second sold drop Colabs the accounts with and

we and working drive Americas in set agile and such to DXC a set as and floor Finally, actions conversion are business, traffic updates higher of our to changes. front-of-store capture merchandising optimize quick

response across product a We are key seeing positive initial stuff.

but above X%. QX continue we customer monitor satisfaction to declined Vans peer levels, by scoring sales the We set. are our

global sales China, X%. Excluding were up

are of leadership under As Vans being at mentioned, Kevin targeted number a the implemented actions of Bailey.

innovative yet rates it as are encouraged not The we generated is work by like healthy, consumers sell-through. be, reignite to all indicated While product of which high our which clearly underway financial global the would and recent we performance we launched the resonated of our is to momentum. with when collaborations, is where with evident truly brand

see quarter XX% accessories, to another drive where encouraged Earth drove to Vans Face long brand representing the progress continue Members sell-throughs which Family the confident We being in initiatives, made EMEA. The North and with weather sales of frequency broad-based Growth early strong up with to and continue quarter growth prospects Overall, underway across well inspired Only higher including during had and we actions our high performances. the members as strong growth heat the outstanding warm reignite as with and our are to have fueled Day generating XXX was apparel channels. rates regions U.S. collaboration, by digital rainwear product with membership, Collaborations in spend. growth. brands, long-term and in

for Our our return to including travel and we lines business also positive PACS back-to-school. for and luggage, early performed well, performance bags saw

campaigns billion expedition, consumers, promoted impressions. marketing with starting resonating are Circle access Full X Our which the our to with over outdoors clearly our with Everest

revenue and during number and was for Shopping X.XX all-important welcome campaign received broaden consumers allowed Pride Face new to the in reach North brand the well outdoor category one China ranked and us the Holiday. Our to The our pre-sale

see continue and growth with its who XXX,XXX anniversary in sign Past ups We program one-year our to to celebrated translating year-over-year. over XX% growth Explore loyalty

the during steps future-focused a the and another in quarter with engagement Nicole transition strong drive with quarter, of positioning The following pipelines industry product deep new She team sales strategies. we to innovator, period. an in to wealth the double-digit continued EMEA at in our further Finally, up with QX as she in our strong Otto Timberland With of her Asia-Pacific. welcome opportune XX%, performances time consumer positive are the leader, of brand have a by thrilled growth, successful inflection understanding proven at strategies President driven experience. a brings and

generation both inside accelerating elevation footwear success iconic attract culture sharpening launch the brand to design of stories paying our creation off consumer consumers a innovation are the it’s We experience globally the focus new Fortnight. shoes boat with our and of Timberland as we see and and from a to to

commitment Our and to craftsmanship continues product innovation to us serve well.

driven led especially outerwear of footwear, accounting Our by also by hike, across sales. for sandals. QX and men’s strong, was outdoor, like and keys, a executions whole XX% was logo trekers apparel seasonal lightweight Apparel trail-ready as with quarterly growth lifestyle

can the innovation first Timberloop end product We Day, its treker, we be the greener continue building at with focus our introduced on that to the and of drive in a future. footwear journey. equal Earth circularity disassembled recycled On

key with saw work our growth. weekend. week. to the Samuel the Pro, and Italy, first Initiatives with boots consumers selling trajectory are out Board, program to our and include these limited future like Timberland expanded Germany. about to edition of excitement from also are from connecting the the U.K., France, we Across We U.S. one and opportunities for brand to the work, Timberloop collaboration the work, In Adams take-back around in its excited existing new we

in across in sales by global in and in inventory value XX%, were It’s APAC, saw our a but that region. noting largest growth conservative trends in the this was globally U.S. the brand sales down lockdowns, in end mid-single up excluding revenue consumer softer in customer the In Dickies on Americas impacted QX. Dickies, reflecting Americas worth of the other more were from markets posture positive China customer, Finally digits

strong off higher U.S. value which work European the sales XXX-year in and our our reset driven e-com anniversary on We and performance seen average Our order XX% by IN regional EMEA. products. business drove kicked to DICKIES, lifestyle campaign, sites has continued with MADE up traffic

reflecting end. accounts. positive. a momentum has lifestyle, the York in energy, soft line top exposure the to We with of growth broadly portfolio revenue broaden quarter the globally and Sunshine collaborations, our enabling Supreme, larger New Zero to work are balance generated Supreme and with value Dickies remains Tier and was underlying flat growth brand with into Dickies the distribution plan. performance Starting in four its largely of XX%. brands, the of The and generating Outside the across wear such are Exciting icons, solid while as work been women’s generating while

from the Our benefited stores Berlin prior and for where there the level high year, energy excitement performed continues European Milan well a and in openings the brand. and of be in to

indicated in expansion we and As be the resuming enhancement store are coming excited to months. May, network we in of

New conducting a received have have which We to engagement returned positive response. events in-person with York, also and Paris, recent in consumer Milan,

We in trail consumers and outdoor continue performance was driven XX%, to be its collectively pleased the grew with leverages number which up emerging capturing brands, Ultra, new which on road. it our position maintaining XX% its products as the new by of one

of on of product focus Vantage speed the and development space recently the to continue launch Shoe. shoes the innovation with carbon entered We and

little EMEA brands more are the in demand last season is reorder of of up across bag and start. by schedule, our ahead stronger year, with the anticipation good the a of than off shipments improving performance higher back-to-school order to an Revenue driven and and our category PACS books, travel We the XX% first Americas where healthy versus quarter. was business rates and a during seeing

to we on making purpose me initiatives. led our a Let progress minute to update are take on sustainability the you

Science our the in has of pilot our we a targets, first Thailand regenerative world Pera VF International. part in between Genesis As North rubber the invested Face Vans, invested The across key meet number Based regenerative in roadmap a of collaboration materials. Through with to Timberland, and

our journey. Zealand New for and collaboration These regenerative been with to It with understanding We these a had wool in platform the in to support Smartwool first continue partner benefits of of in use creating materials the raw deepen help captive world, create regenerated Marino to farmers’ supply products. the projects icebreaker.

the and receive Timberland to our tied taking and index. The second recognition Vans continue on We Face for and place with North for place transparency transparency efforts third fashion

in we efforts outlook diversity purpose-built QX, passion, the topline and committed ahead is the perseverance street family the we delivered tailwinds. and are Finally, testament inclusion with Everest active proud is of and wear, importantly, to to remain benefit Foundation, and the expectations, our solid performance a which maintaining Climb All-black of consumer success. a In resiliency The drive for and we fiscal initial remain favorable outdoor, brands, summary, consumer on to first This impressed whose advancing on Smartwool. amidst that and sponsored Mount of North operating our Face by from XXXX. VF teams, continue environment, softer by of execution, the I our focused our our spaces our

and you Looking ensure forward, strategies. that, I With investments the both We geographies take Matt? sustainable macro-economic can we persists hand confident financials. control are the will profit in to headwinds, ongoing across things our we strategic marketplaces from over that Matt will and our through growth. on and remain and continue uncertainty focused long-term to we

Matt Puckett

good and afternoon, everyone. Steve, Thanks,

the performance up mentioned, and achieved As X% consumer China. up environment. was was softening digits, up amidst $XXX basis. Steve impact of topline the FX low-double delivered terms reported our in a on constant that nearly the expectation we million, was Revenue negative, were translational in and sales better excluding quarter than by dollar a initial X% Including

with basis down Our XX% largely dollars, on in line XX% a and was reported constant down expectations. dollar EPS in $X.XX, our

However, primarily plans, non-controllable about $X.XX driven our relative impacts by we FX. incurred to of

although was let talk lockdowns business from across the feeling we value primary me unpack standpoint isolated Revenue a China Before the from COVID still effects impacts are COVID-related are across QX. the open I Americas up operating the environment during in of the geographies. in P&L, today Globally, about our for X%. we chain,

Our in softer and considering the resilient traffic performance our has subdued overall been macro backdrop network. levels DSD

and Vans key revenue growth, with more While been generated the seen The X% solid buy the at has end remains begin more the the certain open but to for outdoor cautious driver, regional value have end, been generally. to approach the we higher impacted segment consumer has also a to retailers brand. take up

in Face, continues we was continue Italy up see the to recorded This which strong with position the EMEA take strength Dickies. traffic softer Timberland, PACS, marketplace by were All achieved they XX%. was to us strongest performing as the generated North and France. driven with and despite The markets growth Smartwool revenue opportunities brands consumer impact our particularly All to region levels. of However, up our performances of brands confidence, arise. by In quarter, advantage

wholesale grew was double and APAC with by at direct-to-consumer TeleX down XX% both being Importantly, digits. QX stories.

across First, with North a market the the the with China, down on we experienced of worth meaningful impacts been during from business It outdoor quarter, generating Overall, strongly, rolling with spending QX. each double-digit Face throughout to improvement the in line noting continues expected. to-date as our seen Consumer is The has lockdowns overall has grow soft Mainland, XX% growth expectations. in sales progressive segment quarter. the that the month post-lockdown

growth being nicely our the with high-teens rest seen recovering business Asia, across in is of Second, markets.

factors margin, were the by we adversely to of quarter. gross a Turning number in impacted now where

margin largely line XXX plan excluding impacts. Our our points, in down adjusted was basis currency with transactional gross

with brands, last evolution which channels relatively As mix, higher primarily driven impacted costs, level points activity, We anticipated, by by line remains increases. of year. together freight this particularly was the which by in which XXX a of maintain promotional were reflecting price offset basis partially low margins and and

the normal. to environment. disruption use Let This updated albeit pre-pandemic moment for level Relative time scale starting and and supply see you, you mitigate diversification supply to continue on of is last me and nowhere advantage chain to we we update VF the near we the take a the our ease, competitive chain a headwinds. are to

In so. recover as move we well do time terms placed we China makes the in take our are fully The supply system some quarter to and to relatively we QX weeks sense eight flow during is it sourcing, will step lockdown but quickly. closer of to where this operational continue to into the overcome, work base consumption and from through to of production us to for

a terms in the and and standpoint, From better times seeing are ease spot This transit in there cost overall is chain of in to high port. leading improved reliability. historic predictability shortened our reflecting In for levels. congestion logistics, relative air, water, to their slight across continued abatement I’d thank these rates times ocean some remain we dwell and disrupted teams like to is both and perseverance work, this albeit supply in hard environment. performance a

to unpack relative a Moving couple to are number. headline things on of to there here the inventory,

of point majority First, with began of suppliers suppliers. month this and inventory The shipment inventory in good we we of these taking rollout program at VF finished we the implemented or results generally have this point. additional connection at our different chain financing from program, in a the owning In the with the an the so. from supply ownership past -- in destination ownership QX, VF took result of

are payment inventory an cash we is increase taking supplier of not no to is in the on flow, the Although, did point was sooner, impact offset in which due Accordingly, increase inventory since up there at is ownership in the the by payable, accounts XX% the quarter. which change.

change purchase contemplated be finished outlook. flow our terms has the increasing Now majority is financing with September of overall This effective the in cash the been cash same base. flow, VF time will from supplier the at payment that chain established will on orders program while Xst, improve good issued suppliers. supply benefiting operating VF’s This its impact

were up excluding a in Second, complete comparison organic We reflects as our and our levels, inventory to On XX%. unusually our last basis closely to inventories increase in transit inventories points, in better This light the strategy. transit, shipping XX% channel adjusted about although strategic promotional good largely softer planned line of levels, margin finally, down inventory the support own the anticipated XXX two-year was by monitoring which assortments. of a excluding we investments, reflecting on-time plan, feel environment, a considering continue the targeted ensuring priorities. on-hand deliveries about is planned. in consumer grows and gross in And basis low we by margins maintain we make year’s lower our are controlled operating with

our quarter reflecting X% our Our the and continued investments On in space. discipline. quarter, dollar on cost and our broadly was by in quarterly in with smallest X% -- revenue reflecting growth, strategic technology digital line SG&A in primarily the year, the our constant maintaining focus increased basis, initiatives of P&L the up managing

We will purposeful continue to across costs the with a approach and thoughtful very business. managing

Turning to currency our to our revising outlook currency fluctuations. fiscal foreign a confirm XXXX while basis we outlook pleased to reported adjusted ongoing that maintaining impacts I dollar negative fiscal outlook, are earnings our from XXXX am on reflect

total dollar adjusted $X.XX to growth X% up our to revenue constant unchanged expect prior per at least $X.XX expect U.S. outlook. global year. share earnings X% fiscal the We balance across versus the contemplates year This We implying be of FX in dollar X% of basis. now prior from major on significant the dollars currencies through most the the a constant reflects rates current of and to strengthening

be of account year. impact, to versus last we gross result margin operating to now expect a this up and and As currency slightly for

of on a Our about implies operating profit basis. constant dollar guidance XX% growth

ruling the started formalized Finally, clock. decision A July to the Timberland issued short tax you on I’d give judge XXth appeals on a case. like the and update

our environment the teams year. continue profitable just and we of benefit a like elevated work We favorable expect to am I round the We remain proud will open tailwinds consumer our add in has our the deliver line uncertainty. our questions. of to your my TAMs of sustainable of from great to of against our out to With fiscal that confident VF To family now take strategy. and that and I’d this during consumer enabled in deposit and that continued third growth, that, strategy quarter drive to brands in softening our strength despite make the remarks,

Operator

the comes Thank your from with of Vasilescu question. first Please with question you. [Operator Paribas. Our BNP proceed Instructions] line Laurent

Laurent Vasilescu

question. prepared general of the from taking health what for remarks to afternoon and my wanted about macro you on so your and standpoint. thanks market ask follow I Steve, seeing and consumer, the Good are up a

how of channel the typically can the XX% number most actually ago. outperforming likely With and have don’t sporting versus just seen glean a brands days which on North We -- of notably brand anything up pre-announce, this a German we goods other Face, state two channels? retailers pre-announce, year,

Steve Rendle

when on had across we Laurent. that, China expenses up certainly I data from lagging and market that an there’s said, up more but time out the of changing, -- bit data. is is interesting the broader only is an our all And spend there lot data our sentiment as I consumer health has as appreciate is Hey, impact lockdowns are quite as a at are and consumer But consumers this of is the would certainly, and becoming cases, household you good not markets, question. looking of impact. choiceful own vantage point a generally behavior softening significantly. some support It in

As look as that and business, it it over of we reflected at see we end in that’s part our market. value the and the primarily consumer we

five a brand a small and really percent our As only mitigate one we have years total it’s last know, over revenue. you work we just exposure of bit of have and done the quite the to

there support see, where sell and continue where own impact we see our good I our trends to health on that our consumer us, of for is through. accounts, consumer, macro think are our with sell-through solid market in outdoor, for you certainly, wellness and key where limited mid-to-higher positioned end continue are and So, stores and we and the we digital and our own to going,

quickly managing in the environments but chain, to best current time and place. products really selling the are got closely ability right not have with the they right in to right we place our the that the at to of to where the product We ensure the moving are very products attentive are right supply

for speak -- Laurent. can I So us, we -- from

energy strategies energy specifically North see we these see But have brands, We our to the emerging have in to the people the give in of are place. us work you the in the done, that us at well continue Ultra, continues lot confidence Timberland importantly, keep brands Face, across with most positioned. a working to well we The Smartwool, we positioned

Laurent Vasilescu

talked quarters, over Very we Vans improvement Vans. how some still to, the wholesale you sequential you non-operating $X.XX a then with helpful. And DTC we do quick do think then, that? for about impacts, Overall, Steve, three just and were question, that? about last And about dynamics then there a channel modeling between how quarter Matt, question, items. just about And unfavorable think quarter I think talked last of regards

With the just you. there consider? or factors this largely that other $X.XX adjustment to Thank were quarter, FX was

Steve Rendle

Okay.

your of part important. maybe say, first first and let think, I it’s me The question

are are not and are not, Vans we expectations still while We in our meeting we confident.

leader. got have the right We

expectation. based are the You to across well from us planned. giving Kevin European absolutely he above was revenue and that question, But benefit that we the From strategies China our year guess was your driving on most business the showing in and standpoint in positive last are business heard on a traffic confidence our the our comping and meeting, I are and right really but DXC year. that QX, the in last slightly a do on to lower sequential strong lower There continues than missed side, actions yeah, is quarter track. place, we importantly a

sequentially, our campaign of that narrative place, we that offer. the progression experience, where drive control on focus own while in have can we where can we as think really staying side Classics of we DXC we think So product the the that mindful also our about

don’t see with at and all continued skate it have what innovation Moon good but in to as business. go gives this Ultra, of guess that still growth year in dropped innovative to to loyalty side products where the improvement I and collab comments there’s confidence at good because double-digit long-term that in grow a remains is partners, with significant growth in it the we Stranger every It risk to our is across actions we we make I rate. continues We in say high this around we in where have that seeing remarks We our Brain future. its really we in confidence program. not, move engaging new the and against that Dead, consumers mitigating double-digit sure sell-through. evidence in brand. the tremendous continue seen There there has of our sequential Sailor very is is are new want new is coming strategy, place Things, that understanding relevant enjoyed to This the that joining a the trajectory and kind strong have have and a past and our we we and of reinforces and know number the we us

Matt Puckett

perspective. we are from plans. significantly little expectations in the of year Yeah. I But in below not of compare will was add performed a off our did toughest the quarter probably X% one against point the on Vans in quarter. grow the The what terms this ex-China sequentiality. quarterly brand we Certainly, actually our a

through numbers confident standpoint and well China we in improve obviously a well, kind the compare -- So Steve we see at the year. year remain everything looking brand sequentially we to just expecting of the business the the as positioned from said, how as for as

Steve Rendle

I non-operating impacts, the you asked Laurent. question love on

got the have there. You details

spot are on. You

easy only is cents laid Let of now that that I is most it’s of and out. is $X.XX And those the translation we rest okay. P&L this become when not about of is margin. component get things $X.XX confused, gross kind flowing which reduction and me the the our worse, $X.XX, That to piece our $X.XX, are pieces, Currency try because gave has we kind through and all transaction of confuse, currency $X.XX primarily unchanged. translation Currency which through the transaction. you was we talked $X.XX The answer before, to believe.

at how point think transaction think kind that’s which impact $X.XX two-thirds of of against what that previously, non-operating talking right view. thought is I of one-third appropriate, So reduction about about were translation, you to $X.XX a kind get year-over-year from of we that if translation now you and

Laurent Vasilescu

very helpful. forward you looking September. to much Very Thank and

Steve Rendle

Thank you, Laurent.

Matt Puckett

you See soon. Laurent. Thanks, Yeah.

Operator

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

MacKenzie Boydston

taking Boydston Great. Hi. choppiness Camilo. inventory, just am how are given you can for that Thanks your first just manage I given planning you market, to This on about in My our curious, for talk kind choppiness is questions. just opportunity of there the the and is just Thanks. there? MacKenzie on question China.

Matt Puckett

Yeah.

remains for to clear opportunity growth maybe Let with start about growth. of opportunity. want the talk that me kind and Clearly, a long-term will think it Steve we

are largely We business at have to XX% guided We about line navigating in fell we challenges. the be that the XX%. and with first quarter short-term of kind down down in

If growth. look across good rest the we really of actually region, you saw the

brands themes Importantly, of performance with aided momentum Face. kind the by maintained really it coupled execution tailwinds, North but our consistent in there, brand of and market outdoor particularly The

the to level mid-teens will the what of moving back levels is happened. are actions think the that really supply move pull do way taking expect sequential our that about our then that We into is of back down, mid-teens in to think and So with get which a and but returning negative occur QX in as in partners kind saw improvement way growth to swift what’s a probably half I us of year. in we is with really some of aggressive of of and XX results on forward, our we expectation retail still you navigating -- QX inventory market lot the anticipated, in we the terms weeks to of be to kind

Steve Rendle

what’s think suited consumer. when the in awareness continue the consumer to market significant Chinese you you well There distribution China trends and look The business. Maybe Chinese the just is the and at brand Chinese portfolio opportunity I market, see committed in North significant and and that to And is our finish see Face we opportunities. opportunity that long-term interesting, out, very remain long-term within extremely growth certainly for to

serve consumer to our and us teams, the closely the We and most a knowledge. have established strengthening developing structure on think we well-being Shanghai, well But really importantly, local extremely connecting in will of long-term. the local serving that health that Chinese

MacKenzie Boydston

prepared touched then you with That’s kind great. holiday. you for Thanks that for wholesale I color fall just more some on having on and this the partners discussions but of that. your think remarks, are in And

just So, might timing biggest incremental where risk from would are maybe be any more be cancellations you the a helpful? cancellation caution, perspective seeing any and

Matt Puckett

from impacts a exposed both promotional activity one. from I is standpoint promotional. we to us penetration of our were more an thing will which on important that, really to levels I of the take have that maybe end higher challenged away got With direct-to-consumer which we some purposely Yeah. that more inflationary less generally and I those lower higher have international, channels, portfolio and really susceptible more are think pivoted guess for and one consumer. important to recognize and of

retailers. the with key with partners, we in strategic are retail and of a margins high brands choice in Specifically our and which generate partners the those our Europe, for U.S. both we partner remain

great a very a on and over work got together lot evolving strong us, closely to issues transparency in how brands, that dialog, of think, kind I that ultimately, of and we have connectedness businesses, to got and we those allows have see frequent We time.

it and have model, at cancellations our always where when contemplated, As we look stage, this but business it’s at we are we cancellations to that’s something relates today.

good. remains sell-through Our

sales inventory Our the overall is really are healthy. well stock and ratios to balanced

that’s of are of and viewing see certainly closely that, So cancellations, very while our this watching are of contemplated outlook. will we we we kind how all and in feel balanced in we some terms certainly,

MacKenzie Boydston

Thanks for the rest so of Great. much. of the luck Best year.

Matt Puckett

you. Thank

Operator

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

Matthew Boss

Great. Thanks.

then anything the you to is that could that I low sequential embedded double-digit you days the just think for maybe would at year? Face the that the cited XX energy topline speak driving at relative cite you level, and the any brand, overall by portfolio And in topline Steve, guide, ago changes guide the moderation you underlying outlook your North held overall? in but to So,

Matt Puckett

Yeah.

off-mountain broad-based consumers. North good of the the helping and In sheer half think, positioned really first and core the and product we down and regions into is brand well there went on last stay a Matthew, call, great as a tailwind its The in will front marketplace channels very so I on-mountain relevance authenticity where categories and that breaking QX did is the strength in outdoor I both Steve, just its TNF brands Face. the is So here. of and the much continued, that across take job

where you there I are think newness product innovation and is see the in driving real a and the real energy marketing what standpoint. teams and from the

product. broader of All-black prepared our drives Expedition community. quite a well with set come in be community. really in Mount significantly extremely to towards really warm Everest as of of rainwear to to industry hard full we also more is lot inclusive outdoor them the This XXX-day the that and balance travel up have came here our carried backpacks through setting see But brand, really You marketing outdoor out strengthen the expedition authenticity our of consumers really Everest have we up, starting opening weather also leveraging And is initiative. selling as year. the this momentum driving in about building the continuing we mentioned QX that back-to-school this that the and think here campaign Pride against that’s well This the and it first products, as and heard remarks, to opportunity I That this well up also and circle part that talk a to for of us fall. a the we are inviting pick stronger

Steve Rendle

performing have our relative VF of well deliver consistently on we now is brands purpose-built quarter, to across Matt, this quarters shown the level. of to family commitments And year, and able it’s kind and multiple at guide, the last this

of don’t little did if mean, year certainly bit it’s we our grew about change based I an risk that growth usually contributing business it’s To we how and of some see of little, way the North The so really offsets XX% to Face. in view the initial underlying In early feel small portfolio outlooks. the actually to any grew overall a did on TNF flashing but not change four for it’s probably view, and kind referenced then we we do to anything, to Vans, and importantly But and in kind compelled kind fact moment. top takes, in the had portfolio, QX, the the X%, It’s combined But answer and of by for But little it’s more we VF better rest question small broadly indicators brands each The a of expectations, the way. Steve Clearly, are and rest smaller accretive quarter. results. Face. than a North your green to a view of VF of quarter. more we in do contemplate at with The remember, a brands puts strong TNF the the our actually the how revenue we even X% and the

We on perfectly wholesale year through good from to not are stretch, planned, this benefit timing shipping and is trajectory in confidence shipments surprise. some the The year, patterns helped a in on But, us overall. by the definitely -- into business we so quarter about certainly, but differences feel better so time, we a well. which we a kind in Face of that where wasn’t of have some closer importantly, and North did last came from terms more out normal shipping any quarter of shipment the as lot then, had and We of shipping were time that are the way

Matthew Boss

just the about if foreign of in margin half the of And the was the year? are And great quarter, gross the within was entire revision gross of just of second then to that to driver Matt, the promotional in or to margin back year color. think margin? full the terms we any That’s outlook, so cadence the anything exchange, change maybe thinking gross maybe embedded forecast on relative

Matt Puckett

Yeah. Absolutely.

gross around have were margin slightly XX-basis-point maybe a outlook but environment have currency that move in through that the up business. something of driven terms the by we of think And the as more There up got the margin. in in little slightly, other So before, to can air is levers our the change, is, to so a effect, I lots change modeled of XX-basis-point relative across the thing FX, there of also recognize assuming to favorability call we bit you which a of promotional use largely gross balance year. we freight

the guide. think as importantly in couple implied the of a puts modestly and year, I we have promotional assumed a takes So there, through higher but move environment we

really improvement As few margin drive the I There the sequential gross are certainly year. that. expect it that a relates to factors in evolution, think we throughout a

as on across the of how see the of it was China based channels First mix balance negative QX brands mix won’t be same the in through we evolving and kind just and year. the

of in on those are winter. towards Face So freight and year QX, pricing they standpoint favorable an year, the right that be were based in the be fall but impactful there will And be weighted will the and in from then in rates more not of I important impact to think the as standpoint. the will through kind QX. tailwind they to as away when through a a That the heavily airfreight beyond move some size terms of as which price a be compares still year did in margin we will start QX, year and it’s actually that toughest The from going those in we timing of some from that’s as comparative note, from move and us as standpoint as a the North both last The far Gross not negative meaningful. hit that cost aggressively will freight, moved particular Timberland, change. increase to the compare and rates still had I through increases think QX, balance to will move we that benefits QX, market see we negative for of the brands and then just did

it’s think worth I knowing that.

Matthew Boss

Best helpful. luck. That’s of

Matt Puckett

Thank Yeah. Matt. you,

Steve Rendle

Thanks, Matt.

Operator

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

Bob Drbul

Hi, afternoon. guys. Good

you consumer the your state well. Just of it? what the think in talk few about around business, are am can assumptions of business, is some around the the are how over your that have I almost more you volatility strong about of quarters? piece on a first, when me, so are you I as next you second assumptions of talk around planning very follow-up in on couple expect some you then inventory the from have I U.S., questions as around questions question Europe just seeing of in that And the -- Europe, and what curious DTC that business you a the inventory you out that is the the

Matt Puckett

will it’s But, here a little be to with maybe terrific been Europe comment market DTC region. continues Europe the performing part growing brands Bob, Okay, clearly, I and us a kind bit. Steve on for and let the and start of remains fastest

integrated brands marketplace of deliver strong really execution think just continues strategy being momentum. across consistently the there I that’s to think that and The I great applied results.

because the what than more strategies from consumer double-digit said but. across are not quarter seeing, have We based broad we standpoint quarter-by-quarter. we management across confident and in direct doing, brand region are and across grow and to grew marketplace the the the region. But are just in to growth in brands. the late. we not a and bringing year the going that We mean wholesale, we often got certainly a how those necessarily broad-based to in XX% strategies across knowing have and every worth I are in both It’s it’s we confidence it’s lot saw are teams so really that really of of life markets what

Steve Rendle

that sure. of certainly, and question, very our both algorithm one both VF, then remains leaders come in acquisition engagement, Nicole a Vans, digital with the if business, have we model thing portfolio. And consumer of in an strategic about our VF the brand brick-and-mortar businesses, done ability evolution online. learn, about sharing inclusively share, and standpoint, important of for one from The business, drive quickly an ideas Vans on our the how Face this think guess consumer long-term portfolio I into as step is Bob, from to teams, the of and background, the that part two largest It is set you obviously omni key take and back, and stores DXC that can on our we you standpoint. think work not our benefits as North North our a but you And Face, across a the to just of comes scale we our exceptional in in just see brick-and-mortar pillars our DXC test, the gets

leaders digital them. right are got that to continue look and their or line We consumers in ability it lease virtual the to in engage understanding the and pull --we have place be our physical right help really them to elevate us our to convert or across

Bob Drbul

closely I if you absolute but just about the that level today? brand it, inventory maybe put any numbers by you you that sits on And some you inventory where are lot when you you to comfortable with around other the have, with if pieces a region, of But pockets number moving could at can so -- Great. said there are look concerned there’s just in generally. the the follow that inventory, up it inventory of was terms the are organic inventory, think I by around or

Matt Puckett

Happy good to there. we Overall, Bob. help Sure, get Yeah. we as to we are, said. feel try certainly about you where to

are bit We we probably we yeah units, China. I think where that were elevated. if are there look across different in little way the business areas a

of we planned kind position moving that have China forward. with quarter better into actions the coming in We taken in are and the a have

in-stock of the but sell-out, in end about where place. prepared quickly. in market about some getting a we place inventory pretty actions, So actions is and change quickly pretty have pretty that referenced thinking lowering business stage and and So I bit in kind of brand how elevated at a some healthy this inventory regard, better U.S. aggressive and in a upstream and we into we which lower a little kind back business remarks right? that expectations stocks are given Dickies of abruptly the we we Certainly, seen there that of ratios are feel a consumer think terms good the model also where softening the pushed some with

that’s we brand, work our that. but bit through. the not managing way this elevated news good So we capable we inventory, little point through core a will is are all not The something at of And so are Dickies in right?

improving incremental as will are I generate we the other the important the direction. key thing as think see inventories we with If saw in is sell-out, the volume at place very now that quickly partners. move well, just quickly that retailer it right

well rest thing. and positioned. am if but that’s a that’s Vans little then a of So The again core not few one products. certainly brand, North places, across Timberland driven unmanageable in honest, are relatively the high again by and I is something Face the And

continue from North think some back cases still more key in little is so we hopefully The color. kind and I that things into of to have, stock we to gives a would North Face the but better standpoint, are to some like hard working Face that drive missing really a overall you position

Bob Drbul

you. Thank

Matt Puckett

Thank you, Bob.

Operator

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

Michael Binetti

in XX and us seasonally and lot thinking as going following here, just a on it’s XQ earlier revenues in has looks the both at here. the Thanks about help the second I how North -- and you there is understand guess, Matt’s about Europe Vans connect like would can more in big in broader to XXXX, picture, right relative model and market, to the when then, curious total a we guess, got look but on And guys. retail know now Maybe relative going to zero for question, earlier we important. the little and help up Europe taking from I am Vans we what I am brands positive love up just quarter, to they and consumer, reacting China from mid-teens total a in that’s are you you into get about the think on the response I just as are orienting bit little the company Face, how Vans, to consumer an to for I US in see different in X% about understand North brand XQ. questions Vans those markets all in versus the in just comments difference in on and Hey, XX% to the XQ Europe? growth two trying down in for our Face improvement America is how China to too, to for

Matt Puckett

will on QX outlook that the how Michael. for a to your you questions a I here by will bit. Thanks, brand, for guide and answer or think on the that to bit try about I illustrate little

North The like going in are certainly, that in we the think, saw QX QX. imply, Face, would to the see large of outlook we a kind not I growth quarter

QX, So quarters growth The But in our deceleration we you across some Vans we year. Face as see in it’s look less then kind will case see driven by That’s solid some QX sequential will will China improvement expectation, there. of improvement still onto Certainly, is into really negative. in in North really our expectation QX QX. the see China’s is and across and

haven’t of will modest other see down by Vans parts to XX% XX% talked XX%, XX% we XX% But business. got the as to that to you sequential about a VF, as I that. of in China is you implications, brand. well down kind improvement So improvements XX% by for think, in China some driven the in it the But

us. So revenue seen and with at maybe about compare Europe here that let’s think I what way on we you the is, Michael just over between and specifically there Vans EMEA U.S., I’d the have in go and talk the were

we I market. way our European think of that coordinated strength to you go the saw the platform,

some from consumer, So season ourselves to able those driving both strong the physical used you those tell the distribution inspired of key also season-to-season we been retailers, are and sport would more consumers VF putting quite parts initiatives, but we and understanding lifestyle on deep that products I really that’s of the get place a we have relationships and the digital kind where where quite Europe are to at the thinking of placing key the strategy marketplace in and scale with consistent really of real critical account in a really icons through more front to look those environment, of really those leverage right product. season those, of a specialty a to basis. and is drive in integrated

growth in those has Germany. historically Our markets key U.K. the come in and

of strategic we I along think very leverage have this see U.S. our really a appropriately see where give to into put use think his views to into learnings America year, revenue different I powerful work Italy. of come VF and at starting those multiple strong honest traffic team we stores owned we share results. continue with learnings and and where And of and quarters the here seen we growth platforms compression you in growth we to will drive internationally and us the France in that, United the of you, with to Europe of coming high and will Kevin assortment quickly to in think to consumers differently them be being stronger as And integrated are merchandise positive honest taking one start here of the together North contrasted to or back. model. able you As those learnings those really bring -- are benefits marketplace concentration to brand that such have here learnings I our now combine from States. move key you nice to the a those our openly the look We and that’s the take

Michael Binetti

Thanks all the a for detail. lot

Operator

Roach question of your with the Brooke Please Our question. line from comes with Goldman Sachs. next proceed

Brooke Roach

improvement for versus you is stores you follow to been guide baked as in and you and to those store of that brick-and-mortar had Vans covered, Can that into on now campaigns? the the the I lot pre-COVID so up you brand taking for cost wanted Vans afternoon are the about much America comments levels? quantify Thank our margin level and implications but fixed rollout what A seeing VF thank has the that half made anticipate continue you for the leverage Perhaps you. on productivity you fleet Americas. second of questions. additional Good

Matt Puckett

and think that we improvement really to today a of sequentially ended which quarter, Brooke. kind have kind kind up of kind tied XX% will pre-COVID so productivity take different improve, are but were XX% I much in quarter-to-quarter But from we that was where Overall, improvement. of this That’s in see QX. revenue obviously from of I Hi, being it been seen the we didn’t to which that. smaller than didn’t is standpoint, our store and a compares, traffic quarter a expectation. we

end what move from the balance of where going the by XXX% year, to we the right As across expect of we were we to the productivity pre-pandemic. at year be is

profitable, on are the four-wall have, we of as kind at the of really kind our even bit lot a those that set super Clearly, are would they with there high. profitable P&L today of it’s had modeling fixed overhang brand. been cost productivity of extremely you overall in that terms assume. stores and levels the are a which earnings is That that we what below where for there But right, of a there lot we that’s were operating a absorbing generate implications So are where a of said, the continues associated XX% level, line productivity some some at and EBIT little historically, there profit store highly fleet. obviously

Brooke Roach

few from to seasons? just next the ask early provide your there the you update or your could from pricing can I taken seeing pricing have any for and consumer from If you plans been changes helpful. have an partners some actions? very follow-up, you of pricing on any pushback That’s that Are the Great. one

Steve Rendle

we Yeah. on large, Yeah. By and track. I no. right are mean,

product price on X% what it be. quarter, X% we increase is carryover in the and average was expected between which Our exactly somewhere to

think one year then the kind was XX%, and stores certainly line online Vans our have and point they and were brands last and quarter up I our gross proof historically. than were the in thing in there where they our in been that’s higher collectively stores level channel in across of by the a at margins way, our is AUR

standpoint, themselves, from would So have Vans, pricing the beyond we a in meaningful prices but that’s example clear it, seen see what where a we a not everywhere impact we have expected.

So we feel pretty good.

at to a we the of as were X%, the grow bit lower I half, You will X% particular, are quarter half see a going move little first product, year to weigh impact of stream impact into the in in related the or there will back first that some to to in mentioned, little as more. brands start that the bit we

Brooke Roach

I much. so you on. pass Thank will it

Steve Rendle

Thank you, Brooke.

Matt Puckett

you. Thank

Operator

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

Ike Boruchow

kind to magnitude couple versus And when you promo ago, XQ, just an that? is is you. Matt’s the the or from just of said, color. of last that you about on outlook Thanks think you follow-ups all question, or think bit you. little months some QX any expecting? or are in question, sheet? to of geographies a the balance report decline Thank to I margin like guys. elevated three I Hey, what anything to one think, Vans us you on months -- three us that Thank for now guys Matt’s another that is specific then broad-based Can the help are you the Matt, you And give a of decline the can gross then expecting inventory. appreciate

Matt Puckett

Yeah.

lot but get position, months there, is I I which be sure not three it I where we am at make inventory be, probably than be The from better a want were there’s to you ago. we number, going positioned to So where two now, to plan years well, a all. we give to will going

are forward, in-transit kind for compare. way, Clearly, our in the expect by be focused we we making I I a have But, balance are year. what are to of thing. going got we time which to outlook period the have about to We are continue and strong across supply, it that an we right this brands QX, of into see the through a days we think our growth of inventory, we we will as now the look continues inventory we at versus line So and as support sure right the days impact what our two-year increase to of good the on new and we are where with of expectations. is our a is feel look look

in carefully are we to positioned manage operating that think very for about the going we good terms we as in are environment sure, of where about are feel but we there. We

gross As in down margins point. be relates to it about I will they expect QX, would a

Ike Boruchow

Okay. Thank you. Great.

Matt Puckett

Thanks, Ike.

Operator

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

Steve Rendle

love your three leave Hey. Thank I’d takeaways. you everybody for you to questions today. with

is against As you targets, we what have outlook we are environment, generating our year are revenue Despite margins. we the for healthy have certainly it of we a teams direct heard, that reaffirmed delivering softer is profit and hard consumer our I passionate resiliency reflection think a of is of brands strength our and family across -- business. the the and working the

those about confident view things our the Second And then, portfolio. absolutely are growth is we that about to positioned how think the thoughtful we we control remain we growth. lastly, long-term can of our on long-term that investment, approach and to be sustainable focused about are going to VF generate and where supporting our

It to in Our that you look are you really Denver to come. we continues September and the portfolio years XXth excited in. show get here speed we on carried up how momentum on and momentum here host to to at

shortly. So thank to forward you seeing and for time look we you your here

Operator

today’s lines wonderful may concludes Thank this for day. have you at your disconnect conference and a participation and your This time. you

V.F. (VFC) 29 Jul 222023 Q1 Earnings call transcript