V.F. (VFC) 26 Oct 222023 Q2 Earnings call transcript

Greetings and welcome to the V.F. Corporation Second Quarter Fiscal 2023 Earnings Conference Call. At this time all participants are in a listen-only mode. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host Allegra Perry, VP of Investor Relations. you. Thank

begin. may You

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

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

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

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

quarter environment, on the since and a everyone, to dynamically I'd with first start fiscal which for second our provide exactly met evolve. provide a operational quarter XXXX for review a performance. and earnings joining year-to-date, the for I'll continues few afternoon, thank an the words financial our will ago, of Day Good Investor to call. update even month Matt for like you we our and macroeconomic

support we're picture, improvement Greater fulfill broad-based capabilities and Despite global market. continue China, trends as to channels the Outside Asia, consumers mixed result are health elevating and choiceful promotional back-to-school markets. most global an result we're rolling relatively have North markets, improve, cautious relatively in the pockets leadership across we progress. of this of In and in in Despite lockdowns across spending a see across intact in categories our most this saw slowed remains patterns continues behavior. TAM China softness And in seeing despite brands. remain growth influence although of situation across growth highly and which today to continued key this more traffic role in product and consumer as to While by seeing continue we're and the platforms Face, China. macroeconomic influential by to continues our we further confidence. market environment deteriorating investments prioritize needs, of this to portfolio backdrop a brands those to underpenetrated led our consumer lifestyles of brands of continues of quarter and active the another on on mixed of performance, our to lean driving growth Europe, deliver strong had across Japan our continue portfolio strategic in brand's variable seeing the The China, their into we rest important outdoor growth brands of North America, a Korea, led our

nearly total income by million. our bringing cash adjusted in X% approximately and $XXX operating million was year-to-date returned We to quarter, to the the million. grew revenue our For shareholders, $XXX $XXX

of highly made us intentional to uniquely our those our As Investor have you heard to at and growing Day, we things brands. that portfolio are on recent committed building VF always

lower, to anticipated, sales year-to-date X% QX X% primarily to sales are as revenue back-to-school still quarter to result were down a Americas. China. early. a actions the at the momentum bringing So our as accelerate were minus of the start Vans, minus And season and brand second disappointing with excluding in in X%,

As of talent into are deploying recently a and appointments Product and the VF, bench up mentioned Vans and business. strong Day, Officer have now from North adding new strategically we position broad at two a leader at head Merchandising deep to We and a key of made digital. Chief important this Investor bringing Face

continues terms to footwear demand the EXO, Vans Hi line, MTE uptick represents in of brand of progression innovation in which the with new drive sell-through. strong product, In UltraRange today XX% an showing initial sales,

will some impact Bailey on the they facing digital continue confident Day, below product at Traffic we have the initiatives the our for come, levels. introduced. As Investor to will positive be when results. are and brand's take platforms stores that Kevin you to time a be historic to heard they it from And

of historic improvement and the our stores showing in with both merchandising in-store and While industry-leading in-store online. conversion and in levels, sprints are line remains our indications learn early test

conversion half is prioritize that and traffic have into and where deliver people confident direct benefit strong second results to the in to remain I from the right strategy, we focus Vans. that Our to right initiatives rates. the opportunity our our we channels drive at we'll the execute have

the the strong double-digit in to year, undisputed XX% for up its continues and category, the broad-based growth regions Now leadership ever and reflecting to to second and revenue brand, Face, performance all and North bringing deliver XX%. across the outdoor quarter year-to-date our which biggest channels last with leading growth versus to prove

season prepare start showed for strength Nicole jackets coming the lightweight a from innovation consumers as remains to Investor shelves, momentum. insulated heard you product conditions. the As at fall/winter Day, the soft fleece of and which in at the outerwear, forefront With the continued in Otto good brand's

meaningful for double-digit the addition good global this energy driving launched the That's region. the eight. its with Face in in XXX-day success right. X with strong continues brand. and back-to-school North travel haves. recovering on to recognized DXC season to continued And focus and drove the The luggage Americas as by In I winter gear said outerwear, brand growth guide, heat. boundaries finally, XXXX of was Bags performance push innovation the products a in and North the led must to a eight season, from summer apparel for saw outside's and featured Gucci which recently Chapter technical Face brand Collab

added addition, shipment has QX sales up and to strong in balanced is Timberland. in growth total. XXXX. I this North XPLR a well engagement. innovative positioned encourage the extremely to than brand and versus first best growth. XXX,XXX plans slightly Overall, new well. by members timing. inclusion million to proud members continues boots and Face consumers to to the brand for and impacted with membership momentum In to alongside continues slightly were was Vective the last in year, check of Fastpack its continue enhance connection insulated I'm that to order Sales generate length QX long-term out. versus Face its half as the X% The Choice received North and up long-term Boot X% and review surpassing last hiking in understanding tactics deepen running perform to North the XX On winter its deploy of FUTURELIGHT the Award sustainable you more Face ahead Editor's year, Pass feature

sharpened President, Susie paying Global You it's heard and Timberland's Mulder, from off. about recently Brand focus,

like in channels, the into week. Our growth campaign, new launch GreenStride style regions XXXX outdoor new the our new the all integrated progressive work hiker products Turbo with brand relevance Trailquest across number Bold, and during and fall for heritage the taps and cultural Built product one Hiker, driving and

digital launched the New strategy, part has in traffic of Overall, X platforms. sales, impressions. topped driving London, campaign impressive growth our across marketplace strong an As billion City campaign and the York and

community with being up quarter. We the in nearly continue to with growth membership and month-over-month, XX% EMEA, in business see XX% in momentum over our the

continue this performance more we in all, collaborations Veneda QX. trades. also head new brand the and heat into campaign the for EMEA We strong returned consumers on Pro to attract the new new purchasers into quarter consumers brand. drive Timberland business than And new being our growth with with XX% and to Carter fueled finally, quarter, a bringing in focused like as to with skilled momentum brick-and-mortar solid a And by of

a and down being XX% the relating region. growth icons These about heard contributor. mid-single QX, to EMEA, half. X, inventory lifestyle wholesale further we global by strong in as round revenue customer, the in Outside in value healthy, outweighed business Global brand quarter. This quarter, with Finally, to the Meller, Americas, you saw Day. largest in digits In recently at up this tightly the is out our results in work the Global by was by results traction Dickies. which Lance the continues President, the driven big Americas in Investor Brand from XX% gain the the performance brand levels. XX% were in new to women's as impacted The to continues was impacts manage consumer, our significant

overall continues While the and Japan, impacts markets to expansion we from South key continue China, make Korea. in Asia experiencing partners to progress in Greater disruption, growth Pac successful beyond COVID-related with significant feel in

prominent maiden brand's expand the driving us in consumers growth pickup maintaining strong its XXX-year long-range for confidence continues awareness momentum in appeal with while platforms. social all meaningful plans front, marketing On continues impressions a new brand campaign, on anniversary Dickies the the celebrating organic to in to brand regions, the brand. support media with Dickies giving our

QX. Nike foot Poster I'll all by Supreme, of the Japan Turning a in the trends start opening. leading the strong revenue of the ACG grew dropped to regions, showing The as traffic We've to Yoji-Yamamoda Stores release reopening XXXX the in Andre where good into launched with season X%. good continue particularly tourism. well see and the portfolio brand fall/winter collection has as had rest campaign. with the new

our performances and also by Harajuku Bladee event opening Lean. We renovated with featuring Young the store

mid-layer Ultra, Olympus in aggregate Mont in trail and Outdoor at emerging like both been success launch achieved launches growth performance layer driven and grew as Plus, XXX% wall by in in launch in natural won by intranet road already continued journey pioneering and performance by QX which collection. loan Momentum growth EMEA. for led well apparel, by QX, in the their Across global continued brick-and-mortar has by layer, business, in and launched XX% brand's Smartwool the base towards investments regenerative of a Icebreaker the peak X, PACs as the of low our up We running recovery BOA. driven with awards. and continued in fourth of innovation momentum mid-single-digits, as platforms continued was Torin double-digit our are continued yielding the report, materials Our revenue Blanc and in has delivering performance mid-XX% results. strong driven mid-teens strong the celebrating in rate revenue saw key Americas and Outroad double-digits, multiple our are range. outer of of the travel fueled up back-to-school styles plastic-free positive Icebreaker high-teens The practices. growth majority brands the was strong the quarter, which business trends. by growth the X, outstanding up a running grew by triple-digits XX%, Shell behind growth and strategic we strong transparency

we business have half, early business outdoor EMEA before, the is XX% continues which with emerging marketplace. work across revenue portfolio our seeing an is of broader refocus our PACs deliver and scale first strong broad-based of the reset, built consistently As generating gain to in acceleration intentionally plus and grew results, nicely brands reaccelerate, to XX% of our to same brands to Regionally, Vans, in period. the highlighted growth portfolio remainder its and European outperforming excluding continuing by the growth, our recovering

in Face half relevance was Face of the XX%, Work to XX% across where power ongoing Greater to half momentum VF continues highlighting brand and important revenue excluding impacted the and where of across first most revenue been is by the brands market portfolio, all China, international the in disruption. China, segment, were our up strength Lifestyle the first forward, across the strength The XX% importantly, nearly North of North first gain our the including markets about half. Our brands by continuing have platforms. and up sales And broader business inside Dickies our grew the

balanced our prepare largest In all we resiliency to geopolitical to ability reflects speaks which delivery created overall summary, VF's improves, variable and our China continuing consumers are as targets of are an the ongoing by performance I COVID-related which disruption softer unprecedented and to the on powerful potential Vans, macroeconomic and platforms. in confident to growth our we the presented macroeconomic an our the level increasingly and maximize revenue unique consumer brands, We deliver critical in results backdrop. actively manage strategic business have our QX leveraging challenges of uncertainty, remain challenges, navigating. businesses near-term when a in model as adapt and broader to brand, environment and our

Our benefit from iconic loved of brands continues in active purpose-built the strong spaces. portfolio workwear, streetwear outdoor, deeply to tailwinds and

performance. digital and invest the deliver work The a hand closer behind I bench their generating enthusiasm, a regular our and new driving financial to consumers. continue talent is hard testament to teams an to Matt? grateful over impressed and results. take to to incredibly quality innovation, you for enable Matt incredible and product our ongoing to I We continue performance our whose deep with remain cadence initiatives will commitment our contributions. our us through now connection to of increasingly of strong of brands

afternoon, good everyone. and Steve, Thanks,

we of dollar variable China. consumer a up X% as softening environment. was in As Revenue delivered set excluding and results up we adapt in constant balanced and to QX mentioned, Steve X% a more terms

seen in revenue QX, both half X%, by quarter. basis growth lower plus low generated on $XXX the one, North America. VF than nearly plus a for wholesale returned QX translational Globally, X% level businesses sales direct-to-consumer double growth performance in the million, For excluding our was a Vans down the and despite of were After reported approximately and level and a impact to negative X% FX China. in from anticipated at DTC single-digit accounting

down reduction down last About dollar a year XX% to $X.XX, was versus constant basis. relates this EPS adjusted of impacts. or one-third non-operating Our XX% on

an primary unpack I across the I'll on our in the update operating P&L more you Before give environment detail, geographies.

promotional Our Americas China X%, for continued difficult softer DXC and Vans. across disrupt inventory otherwise operations the our during we and macro down Against business components across a and open increasingly network, COVID the rolling environment. by was value in traffic but higher the up marketplace levels to lockdowns in QX, standpoint and characterized X%, chain. backdrop of from excluding the are an Revenue

low back-to-school outdoor in strongly, direct approach affecting growing by channels. led impacted sales, was higher the strong Our down cancellations continue double to sell-out businesses to Vans and lower channels. by digits Face, across continuing leading cautious our an performance by and in to our the lower XX%, perform North region generate wholesale partners, the quarter traffic increasingly

of by by consumer impacted Across single retailer. Finally, accounts. our low adjustments brand was overall, Dickies similar down the was inventory growth more third-party the and in business, made inventory was despite work digits down by XX% further work-inspired helped largest other the products. double-digit rest pressures and value This

up brands digits business remained region. in by and in inventory with more Within corresponding five year-to-date, and and quarter. enjoying the consumer business across Our digital broad-based the DTC approach double region to as double growing further impact By was a driven as amidst was all France, broad-based Both EMEA are third-party by traffic. in growth. cancellations and softer, signaling levels. in some the strong lower Revenue growing in conservative confidence in digits, a up wholesale, four markets deterioration and brands XX% Spain double-digit quarter XX% our the largest Germany. strength to in traffic market, of growth generated Italy, reflecting the wholesale strong are well again, the the the the all brands XX despite brands,

QX, the strong to to North in line return lockdowns to favorable China. The be the in experience well COVID XX% across in to As lower half XX% market the by but the growth improved efforts APAC This growth Asia to quarter impacted ongoing Greater delivered our Outdoor continues China. A anticipated, in with particularly revenue another quarter, in teams further, X% revenue in in line region, rolling to with with of highlighted yet by down headwinds, as half. and QX, and result Greater the progressively plans. the spending. contrast to brands strength for respond XX% and rest growth The of down segment the testament plus to first The continues our restrictions the during tailwinds, consumer XX% as widespread performance improved of and our double-digit Face quarter. our of in was expectations agility to largely improved in growing in China with of nearly

on gross moving in by margin, to factors adversely quarter. of Now were impacted where we again a number the

Our margin was adjusted points. gross basis down XXX by

XXX planned As Rate product costs flat quarter. higher primarily was inventory was points, increases. the down have reflecting price levels. basis anticipated two by negative impact discounts, and and promotional the mix been increased Higher offset after activity quarters, elevated in

the of update chain an to supply Turning environment.

one chain competitive a advantage and strategic supply platforms key for is Our VF. of our

As you our ongoing agility and speed, Bailey, to continue Investor with scale Cameron and disruption. at to mitigate headwinds recent heard we diversification our act from leveraging Day, and

Our and a greater production effort makes concerted with open move closer sense. to to diversification, remains sourcing it production and where base consumption is operating stemming from

We and as QX, the standpoint, times seeing weeks were to effects our through we stable, and improvement system. the with lockdowns continue more diversification, a China impacts disruption. in which to overall further micro enabling are as predictability during eight contributing a and in logistics and large-scale much of minimize the improving are China during said, That us dwell adjust needed filling agility ongoing to From times the across lockdowns deal to while the impact from scale reliability. import, water transit operations in to are still the work we QX. And

move the closer although we to levels. Although, elevated still the times it's historical fall We than environment. remain logistics production times lead compared into higher both anticipate as continues perspective, is lead XXXX. normal reduce worth pre-pandemic as Overall, to total begun from to cycle we've time to noting that somewhat and variability a

spot the ocean air cost side, On substantially higher remained and reduced further both rates quarter the historic but than during levels.

strategy our Coast summary, follow ongoing West to overall consumer, route more we labor North in relative in the the the and cost remains gradually, adds term. to short port while pre-pandemic negotiations. as America the to consistently in to place better the In continues the continue supply Finally, serve chain allows but us and disrupted diversification remained situation This improve norm.

spend the minutes course, which, me moment. couple of of let is a the on hot at topic inventory, So

our ownership with on mentioned we an or at payable which point we implemented for supplier no during a changed. hasn't results financing destination additional rather earnings quarter. QX as on payment is up month the of the increase at in inventory inventory impact in As There's by program taking This chain of The in inventory of payables call, shipment meaning us flow, our we goods last accounts QX, majority point suppliers. the our the supply by due so. point, the in increase cash finished own results, where XX% than were an offset the to evidenced is since at the

As supply and outlook. last and X, part VF's later in this the has increase year, finished overall of up impact half of its benefit $XXX majority XX% with of flow relating in an goods September the has are inventories change levels the flow increased versus in-transit suppliers. cash been operating program payment about million in to begin program. cash will financing our VF to contemplated as This chain terms of two, including Inventory

level support is pre-pandemic summer basis, of underway a include of On of the controlled primarily to levels towards factor, well mitigate XXXX. levels from forward last our to gross manage increase the Excluding adjustments levels unusually year. fiscal largely products. Dickies, Roughly are at as inventory core These and where inventory in-transit excess carry of and in plans. fiscal possible, purchases to balance versus XXXX, are XX% year's higher-than-planned the and and this overall comparison, some in distressed Dickies XX% which largely plans inventory up are in Workwear rightsize increase excluding an levels Vans sell-down a to is we positioned inventory of the and year-end The and product. to ensure the up year inventories about where higher at low the near of was the such spring as importantly, replenishment versus inventory this QX versus case in this term, of last health and core Actions are organic stock and we growth cases, of their of XX%. inventories represents

Now P&L. the to wrap up

we operating the quarter recent to points, growth lower SG&A growth Our down of was finally, our revenue the of in brand's continued to basis key primarily plus reflecting up the quarterly expense the to reflecting basis advance quarter, with our behind in outlook investments, as creation was year; X% strategic above our highly a Those invest First, adjusted profitable factors: priorities performance. were make XXX more as quarter, and the brands; well in margin gross our is digital space our to full quarter, dollar profit investment and in deleveraged in and targeted key X% up X%. our fiscal constant opportunities. direct-to-consumer strategic ongoing still lower and the the continue priorities. of X% technology but demand to on by support investments reflecting continue margins business, by be the we the three brand's growth revenue Vans in in and in growth Operating in line X% which initiatives of margins year key our product lowest projected second, result

controllable spend. to maintain all We management against strict are cost continuing

for our of to outlook on Moving rest fiscal XXXX. the

and foreign just drive promotional marketplace half said, We in amidst in fiscal difficult near-term month velocity the our since our and balance a we which are to evolved, two highly to we That profit more impact the for we're proactively year year. from you even translation of and updated are X% about ago, now environment. of taking approach cautious profitability actions reported a the revenues. has revenue last considering higher the planning constant taking full and on our growth expect the macro points confirming currency X.X plus outlook X% with environment revenue And dollar of

learnings Specifically, leveraging engagement increase our our in across strength sharing we across other deploying order traffic, organization and portfolio tactics conversion our in these the performing areas. to are to and consumer better and leveraging company first, direct channels,

Second, channels by strategic own we'll excess of partners. sale other first, drive the our inventory important profitable followed utilizing

performing Third, we to set back business will incremental profitability controllable we where challenging non-strategic and reduce XX remain year-to-go are brands, fiscal half the with maximizing that finally, position will to the in spring; in all the macro We opportunities well work our to in in drive early particularly revenue; the to year spend those of period. our QX, a set committed of the factors. face of exist

Face of rate details grow growth we XXXX the Within dollar of at X%. at our are implied to outlook year constant X% North plus two an fiscal least suggesting XX%, X% by half least anticipating revenue the growth, of will

brand easier be Our declined mid-single-digit Vans driven where down slightly than half X%, than the year low better in digits one, mid-single by year guidance for half result implies to two, the China. prior to a decline in a comparison

XXXX gross strengthening, year fiscal Considering to outlook. down points by across impactful ongoing heightened year. the of and increasing last our margins to dollar US to on be the XXX marketplace now anticipate environment, adjusted margin reflecting promotional inventory we gross basis Moving XXX and levels versus a more

lowering greater our impacts, a XX%. lower As gross operating result we currency guidance approximately to the and foreign be are adjusted margin margin of

year. last is range to anticipated EPS relative $X.XX Our to now be $X.XX to $X.XX

negative an last increased foreign these several have previously, about larger only compare last these impact are and mentioned FX $X.XX. led that the with year impacting versus factors translation we've currency there headwinds. by of factors the of year impact is are $X.XX non-operating The As to total

this update evolution on projected cash quick a Finally, our year.

of against healthy adjusted $XXX term million. the October time, to with to flow, deposit, Xth, cash deposit and in same on continued drawing further while Timberland tax of $X.XX the to the implies least the you the increase as facility million update early was the guidance cash part QX, at operating year approved cash of payment share commitment made of with generation at down on billion. course tax full forecasted the the appeal Our excluding To expected established the ongoing give dividend Timberland $X return an $XXX we recently year part one-time million over capacity be filed the our We've a loan to shareholders. to in up a $XXX

Finally, reiterating strategy year-end. like to liquidity by balance our exceed the to billion I'd expected have sound prepared and conclude confidence our remarks superior to we commitment with $X.X our shareholder sheet my in remains returns. at delivering

profitable continue will of over brands consistent, business our and and to further sustainable to invest us model to order position platforms long-term. drive in strategic in We our strengthen portfolio our growth the and

consumer As I to brands said softening and a despite we continued at Investor Day, positioned uncertainty. environment of growth growth consisting being perform company a well to are elevated committed are and

is to teams, Thank now to happy Session which our open Finally, difference you. the Question-and-Answer I and We're continue continue to to deliver questions. in strategy. take line our make all VF positioned of ensuring your the well be impressed with invaluable contributions achievements the and against

Thank you.

comes session. conduct with [Operator now question-and-answer a question will We proceed. Credit Please Suisse. from first Instructions] Michael Binetti Our

can And little you're doing want what -- on easier a us and on bit just or dig on actions was building highlights compare the there? help and you just as it you at our quarter. in a basis? I for to then -- rolls for off to since drive What to. I look on revenues look introduced a when China Maybe we like in the the multi-year to -- get Vans the actually to profit give Hey, to we down where one-year you of a multi-year second little numericals know there gave here. we we'll from us online look better but I said and help bit see Matt, we it the to to a there's what a revenue more in maybe get should guys. it of on basis, some little that trend there, looks us blocks on question Thanks spoke any half little a for a when accelerate know mid-single taking list back you the comes an Vans Is bit basis. the at you what will pre-COVID, need what that

Sure, for Yes. the nice hear thanks And Michael. your question. to It's voice.

that of it as what we and really that's business. in took the of our say, all intact. level in be adjusting certainly kind and felt and I our have what the headwinds think to marketplace on that going despite on that seeing a going regard. year that approach see bring in going would hard own that, actions, to relates that's outlook, to plan remains we're happy around the We the at horizon some our inventory I I First, formats to And us. environment work important profitability terms about, the the all And to like kind think to we're profit of own projection revenue with relative profit driving actions was But prudently we own websites. rising we're while just conversion full traffic the really we impact levels to and is some -- about not associated in all promotional in it back, expect those to in stores are our

we how we things is tactics in marketing digital across well things working the kind of across opportunities is tactically to our platform of and deployed drive power Where a an the tactics sense, where and we or and of honest, look do to no One this deploy well and where see other things are brands commerce. seeing working the Vans businesses and look not – really those probably see benefit North our be just digital within biggest of And in to kind same of or seeing places work opportunity. kind that We're little the returns where surprise, the being better Face. same the we're on today. area see we are those other a is

of across we've kind that. got best And people of the on company working so some our

third Steve parties But to really Vans a company. people other us couple we've also talk records of about do help more some business great with using bit moved In fact, our track of parts in that. we're into obviously may a little this. the permanently

couple good we're performing spend inventories profitability. overall additional So business, short we areas, of of aggressively year higher excess kind relative non-strategic I are pretty do, peel in quite and comments spend channels at And we of with is record and a in we of doing in that from as to set that going our We're and then little and incremental eye fiscal floors look more our in some parts it's places spring be. controllable our hard all brands We're XXXX we we're a efficient leveraging brands, view mentioned additional through to plan well as that. going lastly, broken to of our channels work we think a and few the think inventory channels to in own kind fast of all our of to some in towards an higher sell the as see of on standpoint certain of We're to see particular. and of ways. bit leverage across We're But opportunity be tactics business a place where inventory going that drive in we we're and building. we I ultimately some to aggressively even at revenue in as see to the some drive little foremost, to year balance reduce a But the in the to in after I back the always some term, little deploying move certain a how more disposal, the opportunity we first term an a as driving kind an example. and where in looking take and the really early off we're the maybe own bit to profitability. looking bit, would our more

And to actions it. our kind the a commitment driving consistent, are we're of sustainable that mean, growth, we those we there's sense the So – face. heightened I take environment after seriously, and urgency really of given that profitable

Michael, conversion traffic piece. bit the little let on here me a build and

in have working and not I brands functions. portfolio that we leveraging and teams organized important in pods But a and teams think an have, only assembled this cross-functional and really we the very is in cross-functional expertise part the agile here, consumer? we we to consumer, ways specific acquire we in acquisition. do that that retain One environments. four very consumer around consumer against have traffic areas When drive do them. is that of How How and we move focus. do our how

would consumer really that enhance Third, we be how do experience.

is point, have moving which them likelihood the of a conversion. through we higher So fourth to

and on we're that something sets this the and by I meeting a this here point that track very is actions seriously through understand we are basis So weekly help of very of of, cross-functional And out worked keep is, these on so and move probably, taking of can with Matt their any being very, roadblocks waste last take pods. that process. quickly specific is agile kind these teams to

exactly Michael, of year, kind things. on looking a you of and the of itself. of half don't about in the your stack the get at kind Vans couple you're what the the question know drivers the back I period

would go four in of pre-COVID half CAGR, to say, of Vans consistent the second view kind and that if level Our total at the at the look you back first half pretty it's globally. the years,

thing. that's So one

-- I I it's would think say. that

back in the the look America assumptions at driven the our actually first be relative impact occur we in fact, half As the we half. of than I what really of in year planning we first back Vans and the benefit half it's the occur in to accelerated will tougher North are to from what an China. we in half little you, a all year, tell by saw saw

cautiously – low Greater in half delivered which planning we're against if here back by mid the coming one we China, we implies which we're obviously in pretty to think mid-single-digits, six, It's the are, compares. acceleration single it low all -- And you down is overall. about easier driven down in really there down I think, So to half of year. that where the

guys. Thanks,

Michael. Thanks,

Saad Evercore Partners. comes with next proceed. Please Omar from question Our

of couple guys. Hi, pandemic or quick questions. some of only Thanks for of portion at of a taking that of my the kind giving brand is kind question. business winning Dickies I Dickies back least business pandemic winning the had that winter And then as any appetite places in kind starts where North demand temps gains? early in on the of on reads driving Thanks. those set winter any places. to some have for category Face, that early started reads

want Steve, if the I can the Dickies you and take to Face. North take part,

Sure.

particularly point, largest the more for floor here market the our continues and we that exposure the partner, quite that as in inside And from kind giving growth Dickies. Omar, your wouldn't I perform business component and inflationary consumer and years call that rightsized. is consumer on fuel of of in brand honestly, that significantly impacted of we types the and lower the those challenges and the than this retail value well significantly Dickies set. But know value food of a has it competitive our sure, half to term and with we've consumer, is also on by being term. on US inside done impacted to and the inventories business it certainly, pretty nature costs back that that things what's that the of of were those think quickly, over the filling first is of impacting even short and retailer, the being standpoint better in Yes. work with the what energy types in more short the going year really obviously, to impact last some couple

how as But pull we business can pick as pretty they predict to it up perform at does growth when gas it and getting we our of in the you'd US in pretty and quickly this us on part to, inventory, as they times how we away component internationally pretty well. really outsized goes business to does, shut expect expect back the hit of the At can we about well. quick. come as time, to fair driving business quickly incredibly out. So lifestyle that here And they lifestyle as the -- as as same the growth time, the of of of when that drivers kind hard out over will is we work and play share accelerate. long-term really think but the back this the continues And Meanwhile, business the that's product. the brakes

yes, it really heading our is little short confidence in doesn't of the that business the and change in difficult momentum kind So the term, where a bit brand this has.

Yes.

outlook Face, we're be to of done, that that is we up the what that excited team low which we to continue year, has proud month in a half. ago North the that and through XX% ahead Omar, -- So very affirming first for and the double just single, of Investor Day. XX% the slightly of high committed on

apparel it seeing also confidence benefiting I think benefiting we're It's the driving all strong the TAM has but lot from across product. what Certainly, and really a being across moving commitment outerwear, that the growth. it come We is and building to to asking is the which now here We're it's good apparel able should few beyond be seeing part over ready-to-wear items, and XXX to a to every regions. broad-based. component standpoint with calls position, more that authentic from participate We're focus influencing day, across seeing us really just the one it product of move that us channels, in. those all into that market, last consumers' that talked into its active and the about outdoor categories. all from permission life they're on the of energy particular brand giving number that

a you category, going that right extremely and jackets in quality now outerwear is COS for at team, strengthen you of a continuing yesterday, that talk Then halo and the storytelling Those with marketplace, addition snow new well. differentiated the we lightweight we shelves, really cold a well. come its and to lightweight Product into couple into ski Officer doing that Merchandising Chief the capabilities, focus what product -- creation we launched the of our that then to CMO, look years in This leveraging then with season, very impact in specifically partner engagement, think and only about brand driving Our is [ph], the VECTIV insulated brand growth. of new to work its continue the of strengthening weather help is there real year, the of to cause affirmation And to ago, offer. putting that getting capabilities you direct-to-consumer in FUTURELIGHT styles quality homepage. an with Nuptse, the I fleece, online shoulder anchored able product climb, a they're to remerchandising sustainable, us But may kind long-term was got have and way Mountain that the some everything to the think major we there the and is expertise now to as the you product VECTIV. Denali winning they're the really, style of now Jacket drop as doing here that strong that online the I active a done see Himalayan that that award understanding VECTIV. with their hike, the it, And of presentation and or across seen see Fastpack commitment Parka, the last of footwear, historical really be consistent launched heritage think highlighted like consumer we've formula here Nicole's cascades and drive a has

for the color. Thanks

Thanks, Omar.

from comes Komp Our Baird. Please Jonathan proceed. W. with question next Robert

you're in that trend. just currently of on want afternoon. are and when what looking Yes. much Good latest question Americas Curious Vans, you see divergences holding and signs ask your maybe just up the look I'm just like you. it's looks would the about Thank right another think you that the better. progress? here? for what to I Vans. Hi. think expect know to you you at curious, track you of geographic And to on as And Europe make so view when

the absolutely you're I it at way think is looking correct.

good all North within putting And And business. European Kevin America the show did that. in North and direct-to-consumer everybody our Our I continues that in primary the opportunity the for of traffic think the Investor pretty And Day. conversion, way job performance. Vans is channel. exceptional within squarely to unpacking we're and emphasis today around general, is We've America business, middle a here openly, Vans engagement, this the the business. in business, But to the retention through is it's talked certainly our

number got of we've couple component of to with line this to We to story. in where lease actions that go-to-market Taking weeks. the apparel been last set required balance our it taking strong the across be have a strong such looking our of of of now start test-and-learn really that have utilize portfolio, those what but these learnings conversion, engage us on and do pulling options place we'll how apply at our we consumers and will footwear

in freedom more spoke around regions and environment impacted more place confines Kevin or staying that regions. Europe those So now more number framework at more But been one with see giving opportunity and latitude lot more and significant Day, in for COVID and the and you decision-making around that of providing the storytelling, really learnings product, again, Investor a into is decision-makings China team, the And brand the Asia within but specifically the the strategy, empowerment and taking the Americas as really local-for-local applying taking to Greater China. effectively certainly that, our well. America We've about the is with DXC. a pushing within certainly our North there.

year outlook, Okay. or the guiding maybe just one margin margin the A broader That's you reported XX% question helpful. COVID, of some so. last will the time decade for on now, in be the outside lowest Maybe operating to follow-up.

up Matt, there's margin taking are you. think in on Thank willing if temporary to know picture more the lasting? about And side? year then any it I what's any versus that's this actions the cost to just, quantify way you're you to bigger don't of So tighten impacting the

we're result levels support both that But just kind a then be and may standpoint, And nature, line. to there -- believe from our We reserves the short gross in already the freight a cost certainly kind in of that's of discounts, fixed and the something there's I'll this a our in outlets bit of inventory. about cost now in impacting the additional elevated Yes. but is the from our and making But would given talked in question. showing and the impacting as our would base. required in own margin tell certainly margin we supply stores. assumptions we the dealing year itself bit little say is some higher marketplace base on we're there's transitory. extra relatively is of a being wholesalers. higher say store what elements one up inventory seeing a right storage channels, I Obviously, the The Vans of rate margins. in particularly moving then higher say, little Clearly, a from really Great performance we costs, additional would quite promotions even bit how that term revenue that higher the still own that the us inefficiencies like here also chain relative I big and that's impact in what higher promotional we're the our you in channels, of kind well – there largely standpoint, is some inventory we're freight. standpoint, got of of, the levels with given pressure

marketplace view standpoint a everything see kind all that environment the is and So say moving and margin really expect persist my to what tied current there commensurate of we'd that lot are done there's with I forward. just a would not in from to we've things are

expanding do. confident to inflationary by have are been product time, consistently to ability our increases, to our able we gross really I mitigate continually still we cost margins way, over prices over So which, of time ability in and think kind the to higher drive drive

that will there's expect over lot we us. time come So that's that would a there transitory to back

little of this an we any to recently million. that positions of couple and years a we'll overall it's it a of last role the certainly bit this And it, over also year, that actions our set both part reorganization. roles which get $XXX a were actions of basis, announced annualized the of bit company, million that across in on is of during -- we've and all or XXX we as roles over not that open As of over out or back announced impact but kind SG&A, $XXX relates Enable, eliminations of top eliminated that of on taken The Project not pandemic. really the was for

out parts G&A. So pre-pandemic primarily, have of over of come level that couple a it costs call the will fixed of hundred but SG&A, of that versus largely million although into expands I'll kind G&A other

some are there's the those full of some we us get year of the there's those impact some that obviously to will next hitting kind and our -- accrue benefits as things So of financials. actions

past XX%, kind agree, we in where moment expect I or to time. quickly is to and want where recover be, the all not us we at So pretty we see you'll be as of this get

helpful. really That's you. Thank

Thank you, Jon.

proceed. Please Paribas. from next question BNB Our from Vasilescu comes Laurent

double-digit drove performance? more question. perspective my single-digit, performed slides. revenue love What context, ago then ask called algo quarter get that maybe Thanks a the Steve, this it would the Good taking growth on drove impairment month performed? I Supreme. out charge. you. confidence Matt, to for to on And I the low Matt, brand? didn't that for you Thank little on your a bit how And the high a that? of brand that to that what's afternoon. to context for and see about What Any how

From market QX planned about despite this go up It's I'll is Laurent. question. a a Thanks Supreme to sure the was on And standpoint, for ahead. than assortment. I'll decision later make we Supreme. hit optimized opening take based a an with week up X%.

allocations hit to we us proactive last under came very quite team with time. half at here with a bit market running to took talking year the remember key this the second the well normal year, the percentage You right right market against assortment where And approach styles. a

So X%. chain done has some disruptions, Even brand we the well. supply up despite were

couple into better assortment move and we to continue half, flow product an from wins second get here. acceleration we positioned because an A and better expect as standpoint. the We of

together, becoming Those move of COVID. You but environment, stores and to consumers the see we when that the stores of out under tourism have really being which Europe, able And luxury able stores prevalent. opened of well. are as in now cloud the work were we we Milan come more Berlin to these COVID performing

Beijing. That's Now be there, well. my That's represented prepared up the We we're performing opening Market, time. around from Street some coming. new talked Dover stores in the extremely physical And way a Supreme we've in Dover talked will shop authentic but it first in environment. of got remarks about expand we wide. more or what the a will shop, affirmation Market be really the ability within in a of Street great to grow

We resulting strong and get refit in Harajuku energy It's from well-known seen the also really a Tokyo. store they've to and store in that. most the probably Japan prominent, market, results our just

in be better that into look which consumers We very provide this later and the fall, to first first market as physical where bring new have what and coming in new a a parts better as know the the brand means again, market access. US the continue are environment Chicago to excited store store we will to in we new the through we while of

continues and more brand just growth expansion year point come is acquisition get in to So a execute. to back that the of value here, good coming the able and gives into this a us to the the to very important it longer-term that seeing in and team's being ability geographic to more proof confidence thesis be part

necessarily speaks opportunity the VF's to and not Laurent. Day, it's one certainly to I'll go but plan at a access add as to question this categorized doors too, counting of today, about long-term easily, excess cautious more consumers careful even we where but give is We're driving really to more the time, access not the on Investor platforms world se, to very right? -- faster majority your We're giving give vast Yes. leveraging But consumers the core markets band. brand shape next in to the and this around what's open Asia, impairment, best in frictionless, expansion that is and the soon to to the wide talked this internationally as get right see That's this comment. it's I'll growth. saturating are getting kind access this that's of expansion. at more per on in over but kind start really here really, excited thesis more the brand, more years capabilities, strategy, he of the growth to couple just itself, model, and really grow the the central VF's to And scarcity more the world. acquisition to geographic we're to of around take obviously pace not as brand particular beyond. why And the to

you wanted just remind that. to I So

driven to it what impairment, and relates by guess, I non-operating first I foremost, factors. I'll As the all say, call would it's

an the performance track. we supply versus but last the of saw early than actually business and expectations. expected, on have than And was pay our acquisition, which this from obviously, that the You original a may there says an did brand chain standpoint, we the challenges set better of which, the even actually year on remember lower -- earn-out, a we associated payment bit of COVID we of year, assumptions, bit of we a It the given that of kind internal earlier we impact because made little additional a bit earn-out originally earn-out. some implies was an are performed we're with might payment track

from from been impairment business we're and the we by in what relative what of here for present -- from have And and what way, to seeing those and the the testing Japanese yen interest the rates rate translation So not you discount we're of an the in kind currency wouldn't environment and how dealing the marketplace with if standpoint, the and to currencies obviously, also does cash Europe. US that flows. the dollar even value

recent results. those So that and what means rates good. acquisition I impairment. to or terms we that things a about a And good two flows. probably what mentioned as of interest we layered operating to and operating to fact the cash related of of outlook. is it's of really We factors, But determined rates there the non-cash performance terms moved We're of what not kind needed on feel discount our test. given couple and you for the and materially our that evaluate none well in We of fairly how where in those dealing everything with tested, that have that surprisingly, where Steve are earlier as we kind we are feel those

helpful That's very that. on

is question Second gross on margins.

do incremental about heard by XX You Could company FX, the We XXX driven it costs, footwear possibly about bridge, about on that bottlenecks. supply markdowns? of is how Any GM lowered would it talk give much helpful. night. it you. to XQ? Any how context Thank you chain And bps. would is for versus last be be high-level XQ color Or us think one by helpful. the very from we it

sure. Yes,

guided you XX% say, and some some But the to with neighborhood of in the and smaller take terms in certainly say, positioned product going be the by will is not I of full-price appropriate of is there exactly I'm total even and necessarily or our a probably it through let's to some But be we to Laurent, I'll fall impact, of our start our brands, in kind to percentages. discounts our more to smaller own impacts, when are ready, move brand. give -- would in So we've the the targeted of the we're partners through in -- to move the outlets. actions operating the competitive case, that in face targeted given as particular, have vary is on the we actions that. necessary. very But going ways, mix The inefficiency, set making what to able fall so within in aggressive positions we're balance, to the season. as holiday. inventory we're holiday will environment channels the that assumptions and majority we'll be is and we'll where in and market whether wholesale here And in that that required supply and and be And category. combination that's that currency. going we and And on be chain expect what's we as channels, vary depending take that cases, We'll where by expect those

kind as then relates actually is us QX, way fourth kind of XX And be into it And way. the fourth of good think to more quarter, third, begins in by that say a points. flattish your is kind to I think of question, mix to nice the third basis about for As to we XXX quarter down quarter. I'd tailwind the a get

you very much. Thank helpful. Very

Laurent. Thanks,

from comes JPMorgan. Our Boss question last with proceed. Matthew Please

Thanks. Great.

you in as marketplace feel we to currency heightened X% gives about brand dynamic And confidence could you line what top inventory you keeping think the on to own XX backdrop? today? your Steve, specifically, the constant in macro ago? increased So activity then, and the about maybe Matt, promotional how levels inventory X% days elaborate relative the And just do by

off a bit. points thank you, So I'll Matt. rattle there's here. quite a So What gives me few confidence? just

And I we up beginning into to performance the the consistent the bands are the second where of is portfolio, across XX% of us kind to coming in half. think that into we ability for second pretty first project saw the be ex half. the similar that half

of operating of disciplines disciplines really still set is ability well. up, Our perform assistance stand that to marketplace influence. they're European providing cases, Bringing portfolio, -- continue we to cross same in capabilities performed continues within our Shanghai business team broaden that integrated office, -- that new. which as our And fairly same our their the those some their new sharing Asia in set

China that certainly of coming and out will what the seen to we've into continues, QX continue half Our be and expect we recovery second coming QX.

Our Vans. a back half hockey isn't reliant on stick from

and lifestyle active tailwinds. portfolio, more where into much We confidence be and sit people portfolio, there's us the engage in right of to gives needs-based of really those lot leaders. a strategy. certainly But then of balanced playing number that got most right We outdoor high-value -- component the to active of And the we've the importantly, view the the the driving TAMs, having drive certainly parts have a those right one spaces lot really in we to X%. well. X% have drive The positions experiences, to strong, ultimately brands bench right deep of many able our a of market, me that

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the So being if momentum and carried we've out the first last that it's tailwinds able that to the and strategies here, there's driving the thing maximize people, really of half. the

generally, the They meaningful X-point quick I'll is probably the numbers kind by several But there. total obviously, best-performing segment, amount. that been the penetration a the outdoor you to total. of brands. a have One, brands right? most strong. last the a to brands group X- the pretty at of side add are of outdoor it's mean look a couple to It's kind half of the just points what the been back and from me in increase larger in quarters, confidence. headliner T&F, our over kind I across gives of when penetration that consistently importantly have

best half year the tough And So clearly confidence. fact first the the businesses and a of back then -- what kind just QX. the year to we're in see, thing we're in larger the China the of really the in our the part contribution is going Greater a movement tough to to the particularly gives second going total other performing the versus me half business of see that or from half from of

couple of So think that. that data think are a as probably there points I about helpful you

few more I promotion anticipation different inventory your competitive four understanding holiday. of China, are We're anticipated heading window. there – as kind And they looking in As a are for and in itself taking I inventory ago. what -- the seeing on receipts become view, as may being just question promotional compressed it fill and We to and even may last is be an be standpoint receipt expect may to see earlier to Retailers it's inventories the the happening normally something. of environment, building. going attention the as in see that and And weeks. standpoint that. into six break time, the a break fills, taking clearly kind the tell of in our seeing delay are -- weeks disruptive might than of they XX% a to seeing that think again head the of of where careful is market that's kind example, of us full-price how then kind advantage We're we the it XXX% any towards opportunity the delay a of it's selling particularly signals competitive would we probably take from just close a one the earlier, promotional. think right? we we even the it just And kind and in is an are our and we about very things market we really particularly showing. to paying It's We're what that Americas set that from in environment more we relates to we

be we further of that expect compressed. window So that full-price could selling,

think we few of months. bear so And -- I couple those are next we're a we think conditions kind it what we Matt, the that evaluate as may kind of what those of key over as market and are are viewing things, the

in number up we're So than would back of the service A low year. I still last we more we certainly in our cases, assumption brands, the the primarily there. accounting a much to growth lot point. for higher higher to liked. that kind in is service increase normalized was sure, in last in finish the brands. a have certainly, get couple we're because change were of We those line A aside plan of the there own But a of inventory, in business But some plan up seeing as sit the for hopefully those able as for too what planned that brands. been we this today lot, set a aside, sure. haven't We're that clearly explained a we in-transit still not that of to we've And XX% way plan way at to as lot lot to said, pretty year. all nearly where healthy inventories of consistently levels. we're And we our set

product. core in that's of lot a Fortunately,

still of of a a little We're like the number across have in than applicable of a bit We to across pockets be, kind that higher a be we'd the we're bit where might area we'd brands. world. than to and higher that's little China like -- is comment

and fair of an are aggressive way. so And very to traffic sure business taking be but of the share going in of our we're going and appropriate targeted to getting choiceful, make we're be we to advantage kind

plan but of but like of advantage Dickies we think also good anything Dickies few in are time to to and particular, leaving back year-end. healthy I over on us some the -- that certain clean, to to little a we're bottom year of a the high do probably products opportunity year be to going at our plan But doesn't kind strong We'll to next products, focused forward over generate take a purchases. the several with down line close so inventories little margins, core of other -- just for sense the than have be make both So there still setting we rightsize a because feel pretty have very just in places, products, heavier course next top be and months. we'll up this manage

of luck. helpful That's Great. Best color.

Thank you, Matt.

Thanks, Matt.

you. of like Thank End time, Q&A to this comments. I At would floor to turn Rendle the Steve closing back over for

and reinforce again a for things chance you you January. your I'd like Thank you, to questions I importantly, are thank Great. that to And out, to remember get before everybody. To for engage few with we you in for most important your close points interest. just the think

actions we The we many our that VF sharply focused taking drive today. challenges to deliver and performance are continue first and most macro that to financial strategy, are to navigate the thing going our against importantly, brands is and commitments. on necessary the our see

think year holding. with revenue our is resilient businesses our I very overall remain -- full be outlook to secondly

across with the the we we're to of half. Certainly, of first without the balance double growing exception Vans, of sight our into but portfolio digits line low do portfolio Importantly, move as in same a our well performing the half the second

I our currency the I we not this of emerging that that grew strategy. strength our and you has our in see brands, -- the certainly in revenue brands think constant think our but that, importance demonstrated by shows the and mostly portfolio and fact outdoor model we that

this last hammer focused are and think I profitable and we going strategies would those people is extremely determined on And to we have more remain the get the than control. home that sustainable the deliver no leadership what's right consistent, to certainly growth. deliver right on brands, we that I done. ensure the We organization our to in And just job to place team we this in and know things required the expectations. most importantly, right one

next forward So you turn to you joining thank you again, the we and corner us. interest, for year. your as Thank for updating look we into

webcast. This concludes today's teleconference and

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