V.F. (VFC) 6 Feb 242024 Q3 Earnings call transcript

Greetings, and welcome to the VF Corporation Third Quarter 2024 Earnings Call. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Allegra Perry, Vice President of Investor Relations. Thank you.

You may begin.

Good afternoon, and welcome to VF Corporation's Third Quarter Fiscal 2024 Conference Call. Participants on today's call will make forward-looking statements. on cause and materially. actual based uncertainties subject are could that results statements current are expectations to These to differ uncertainties documents in are with These SEC. the filed regularly detailed today's true because noted, use numbers call the constant referred accurately as performance basis, defined was lead release we we in underlying more results the which otherwise represent and issued Unless to this dollar will on afternoon believe an and amounts they be operational our adjusted press that discussion business. in our on which we of

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

VF's Darrell; Officer, Chief me will and Executive on Financial Chief President and Bracken be Officer, Matt EVP call the Joining Puckett. and

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

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teams don't leadership quality the briefly a by and preparation the derisk Now any could proud company effectively and the impact. by I across the us, really obviously much address let cause. the mitigated handled A so for have team. We've in and of seen but to we December. impressed super meticulous much so follow-through incident cyber of control me could it it worse. Great company. Rarely of I'm a have a done impacted experienced been our I'm the I work been rally potential quickly It teamwork journey. better, additional future to beforehand, instituted range incidents. have think

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Bracken. you, Thank

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[Operator comes the of from Instructions] Our line Michael Binetti first question with Evercore.

positive with Bracken, our can well filters you on through here. guess, you guess you're your portfolio over looking I this us in to of you through I the some in grosses of you line intuitive if hard to sense on through particular, which more It's commentary get pushing looking at be walk just just year, the big been takes bit talking mind guess wish in puts that margins, little on seem were number a on a what the wasn't gross of and the then curious, and you strategic a is the ventures. years next review. And offer promos lot you the really especially -- make guys here of inventory. last with, a any as pleasure and to Vans, focus question revenues comment Matt maybe I'm a us be It brands maybe on if quarter. the in the there's could I you us the at to could walk kind would

a understand takes and help there. the just maybe So puts little

I'll quickly, Okay. Michael. really go

is #X being thing a first good all, of market. in the So

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speak tell drivers I'm the today. to you but exact I'll numbers, to you primary great with going the give not line. margin on Michael,

it see. the business, and international is with that normally considering -- primarily we in the strength what bit mix mix, particularly relative markets the decline larger were in would of a the and APAC we wholesale and So saw in positives than region. associated the big

number. and from bigger number price. continues is benefit. almost bit real FX. really The to a offsetting offset mix Freight So be mix modest us is big favorable a benefit FX for that is a

quarter the part This from bit will there. the drag worst see. be of flat, probably transaction really single modestly costs. Promotions us higher standpoint that's higher for reserves, of So A inventory biggest your question product about was FX. that an we'll FX

there's made couple inventories. to of XX things of think We've lot across the months a there. I progress in last remember reducing a

about have We a but in continue than been. place we better be we're to aggressive doing that,

activity with degree, So to while our of of in Americas, cleaner particularly our a a we moving We're in particularly continue channels. marketplace, the to wholesale the some lot a little in promotional lot DXC our our accounts full-price through our we're channels we're including margins you in pull really across if and at DXC of inventory board, online a in this bit up vans, But stores quarter, full-price better. our kind outlets. the business. see look

own where seeing business that's so quickly we're start get to the our healthier channels. And in more

question from the Roach with comes Next line Brooke Sachs. of Goldman

maybe underlying and U.S. longer what from the couple wholesale in in see the well the to outlook term? of and brand I quarter of impacts the in expand was to remain of XXXX seen for hoping as in next as that Can macro you that results underlying we've you this opportunity for the talk North U.S. and TNF versus the and Face saw you your could your we the quarters quarter on might weather view growth wholesale that challenged. calendar

Yes.

I and split Matt think will this. I

a I'll about So I to the give underlying super North opportunity. be the Face. continue of excited growth view you

as said, indications tough. we're I marketplace the was marketplace, we've continues underneath But and obviously are are think activities various place to wholesale doing tough the is doing, working. in that, activations in strong. All and that that pretty both the be got weather brand the a you the we're brand very strength really

You want on the that to wholesale, part last answer of question Matt?

Yes.

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marketplace the then X the remains and pretty in. And Outdoor dynamic we weather ball help, particularly kind coming pretty So behind promotional, segment. didn't the in of

and about that's We're business. All kind you said, to to play consumer a see All And good. of partners see seeing be strength couple seasons out the the thinking that that's continue the from and we're what think we're see plan we the that really, very think market. standpoint what as over of brand and continue planning next how going look the at cautiously. the across I remains our that we of wholesale to understand that, I really good. metrics

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Our next with from Barclays. of comes question the Yih line Adrian

going is how going is much of question marketplace we into be of it going I'm it. How into to an and My as fourth cleanup. split overhang shift the was XQ? go the on quarter to to be much And it

of actions. deep. same goes in seen seen times So where sort out visibility pretty kind reduce brand Bracken get of on to it go cetera. you Is particular of away, to they et marketplace some stores And for We've the question. We've channels accounts. that

last Olympics? where be you is, point So moment how one And really advantage quick at taking I'm are is escape just that? wondering the going my push of the to on the

kind distributed equally inventory inventory, quarters. reset Europe about. really movers. There a will the chains that exiting the going marketplace And would not both in that the we're and U.S., happen the pulling to not On faster happen That's or more most move, -- extent productive QX, is of the talking of QX it QX, say is that's those the larger in It's across so of some is unproductive QX, I can reset channels inventory to gradually. out channels. but

-- that we'll we much Olympics, terms keep close to In plans. about our have what but kind of we at obviously it be the of we're doing do yet. pretty interesting talking some not too We best,

from BNP comes line Vasilescu the with Our Paribas. Laurent next question of

just Matt, the case, just flow a think you think, spring might cash perspective? can up the through December potentially you XXXX. to debt of update on assets, aviation from you're the billion you could $X.XX the off? corporate there's some due, -- cash free so the assets few come you not off. if physical might can you flow think, that And now you I you pay for Maybe get free physical Bracken, mentioned the sell and then you bridge model that's do sign business? And sell wanted noncore can about the Any any about that over the I down. PAC next mentioned help we quarters? program I audience, has just that ask refinancing Are there confident us I how assets other

that noncore and I Yes. kind number, and involved $XX X able that take wouldn't that's back Aviation to there's which one next as what you couple Laurent, with quarters, end. you're close largely related give speak the It's play great try The so think to you. number. I the done. at. to the north start physical of to to the pretty from of and of $XXX we'll a I'll also of the to but out of likely in will corporate are that let X buildings are kind a million exact million, meaningful And get elimination be of -- But that most over program, looking jump maybe in end. me assets, well.

there. helpful hopefully that's So

sell refinance continuing last marketing quarter, the substantive and got obviously pay business, number of PAC bids diligence middle really this need opened As those to who are do in or through is interested yes, it a standpoint pretty the we're highly parties due engaging X expanded objective we and to good. in December aperture of due speak. next that's to as of up debt are that We've been a round and a from kind of the and relates that, not tranches to the April. work that. We our debt down, toward we of To

there. good So progress

to a relates it than year $XXX stronger As reasonable and the year, that kind that be underlying million. flow this a amount business, cash next we're we've confirmed to bit top to progress and of kind the reducing make down where line perspective, we is lot more a as expect given of opportunity drive a inventories this generate will going going normalize We're I'd inventories. of that of suggest to from year. next we'd year. But continue business

next think think flow assessment. fair kind be of I've I still line with I cash that in of before year and we started a said where that's this year, could kind

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

you be could gauge under seeing your rising, gross cost about Matt, confidence surface Bracken, maybe future relative the sequential in or you anticipate for the structural best bottom portion the elaborate we how I of business? in guess So savings margin VF's the fall what's right on what reported And the statement to maybe to the release of $XXX to to line? then the results. And think signs best multiyear progress should to the way that the million may

Yes, on your Matthew. I'll go question, quickly first

terrible Matt with sense couple did have I've comfortable just First, of to ago. transparency, better ago a of certainly was more months and through especially in I I months understand of land. I landing a were Despite the and frame. business the the transparency, the where guidance I been of we that that X the in last better where much lack is on transparency through here. I of lack it, months feel Americas in feel is guidance better through I've near than we the today -- I I going quarter clarity. that like X earlier, because lot have time the I talked business since business have I had, had better

that's one. number So

them, The I of. even fundamental just and power excited them, I really brands. The of deeper in good they second was the and about consumer some one is be what out part the capable better feel. the about. coming more brands about we're what's of -- really I I that look is the probably feel into really really the I good ones there, into really, I VF, feel excited I'm what the won't get

strong Since team. very think here, X a VF. are one within been people strong we've lot I people is more third than The I've the VF, and there promoted

which fact, we'll In can't. I be bringing we haven't the to a outside. yet, also promoting another job announced here some so from be one big in But we'll shortly,

of we're staff. be those fact, would In internally, on my announcing today. X It

team mate. we've as got So this lot I in a just we've to got much of as -- people really hate strong see

and all here, I think the up team itself down. is very strong

we And And ever. for more despise I numbers we're like absolutely guess company, I You it. But of I like you excited coming going. know balance, really bellwether Matthew, does. the feel when you're our last about guess have don't into very you went and call, we have think it feels -- stronger and out a where give it first same that time I will. about beginning, to certainly same the said, about last to the feel me we until right than feel a I the -- see I'm So I feels lot you sense it's were now. it I it earnings hate aren't my frame, is I about where and on the at a it. And yet, I but intuitively confident right? feels And part bouncing

margin. of terms Matt, gross in

back think, So and about as to turn maybe little I'm business that we what as ago, sitting would that we is that's to our will activity beyond. We're to assuming going higher margins a guide reserves, to below will positive I effectively But obviously not as there's basis attributable we a et continue, and couple even think will today QX anything. points, where where we couple marketplace inventory good the forward more and all over of also there not inventories. And inventories to we and that a a bit look years better. moving be careful snap manage get from hundred you more back expect benefit you but We're cetera. promotional say an were are, going opportunity as see at that, time, if and to have cleaner of we we that presumably just kind overnight, and step here I of

there. are opportunities expansion margin gross think I So

the will is mix. Inflation time. just promotional mix, the this I can good mix several a been which We which the -- out has right, think to from guy. we about continue at be scenario, over play If significant about term, look next nearer is waning. over geographic Aside think channel year quarters, pretty

inflation in that going on the we here that to be a current Most sits a the in be of Suez headwind. a won't lot there's next is as And dealing overall, notwithstanding the margin. dent significant. what's the benefit gross in that canal, of of be more bit, a even of see SG&A, that in could waning term could that not manageable. could in the of cost with little issue of bit not little benefit, freight immaterial big will less a little reinvent FX we're relative that an fact, near and year, number. But but an In and issue bit benefit

next the price for So sell the full front quarters and do us for course healthier just how and businesses there's next in of and get and drive guys do we the more more, I promotions. think, than we good at of bad guys over how years down lever really but big us, couple several of is our the

think will critical. that be really I

time. to particularly And marketing. across savings As I reinvest second on product we XX% in Reinvent. think question, to we've said it the the and plan relates to XX% of

Our Guggenheim. comes of with line next from the Bob Drbul question

a got of couple just I questions. quick

question I your bring you is to Vans, with anything helpful. And within there inventories. pricing on just Are lines brand? along can know, share is back work plan be those XX-month you around us on would First the just second to don't more Anything marketing? planning around the

the there was either your With or level? geographically are think wholesale about, that you're brand concerned at in down, by business -- I both pockets the inventories any

I good some I'm would with great question, a make that -- so president the that marketing a a marketing sides I've back I've and programs I feel what X to know the And plan new got but that that are specific second do the -- I'm going to about drill. first bit. a work bit let tour new to to crossed X too It tour, time a good it, a brand was The now, I'm talking of and the because I but about bring not it. We the not mind really latitude Matt mean X kind punctuated of integrates little the would been them very that although quite launching. times think of take have plans changes. But certainly strong coming about through it I we're insights or both take our but is together, and we've not took equation, ready the work one. I very I'll got time thing, combine take say that we're a it to done, we'll have then to yet, powerful of on partly in, still be rebuild. products

is really of audience and mission-critical us. youth though, objective, that minds deeply sure the for making the of we're the hearts in think I

X so a Relative really Bob, on XX%. number XX%, is to here will the you maybe almost I useful. Vans inventory, give that actually down things. is of couple

close. higher would in maybe U.S., where towards the to pretty the to be from just about of end standpoint the modestly get we a the be fiscal weeks sit like we're a where in going actions and relative Vans is, with a place, and from line large, we actions think, good in is really marketplace the Vans So by the reset taking to top it year, as we but of supply I

I there. think feel So pretty we good

of actually the kind that. higher of and If of obviously, well. you the is is the inventories XX%, side right in the the And side where on the are Dickies Face of brand on Timberland on and is overall reduction. other at business is terms is average are lower. North the brands higher, higher only all number performing the look and probably Supreme modestly Vans

of good in if of pretty about So out of it's out where coming good X say probably U.S. particularly this outdoor speaking, Timberland If I hard I segment think a fall/winter overall, in we're that in pretty I we there's Face are taking pocket bands But shape. coming -- the here season, think feel North is outdoor selling a certainly are. or the in inventory, the something the relatively and business and look at. we

comes Citi. of Paul Lejuez question next the line Our from with

what are mentioned how more than long better sellout I second what of being think, where some your a before that And then just brands, you You dynamic question. regions? ordering. partners wholesale sell-in cautious, performing their you're But lasting do see sell-out seeing aligned? And curious quick sell-in, on and

some the guys using done internally outside strategic all is you being consultants. that On review, by

I I'm just that. Sorry if it, in curious involved missed who's

It's take but last consulting people us one. the advice the someone with. that We get Yes. would one, an I'll the of we let first I'll or you the exercise. Matthew don't have working to a context, strategic review. expect do we we're Yes, the in internal take and

that's doing internally And the working that. We've really Board say, are in different got different X the have strong We lot strong experience a X really would groups on the there. this analysis. team of with on -- a who we're Board I area, portfolio

So work that going. been has been ongoing -- has

feel the answer So question I the... you to first good on it. really about want

a cautious. for of as continue -- little the for the but lot obvious maybe to sell the surprised that. I Yes, distort to I'd Europe, and But I so board, think of little say, suggest, be bit actions, with is Vans surprised the there's a would or board, Europe. those I reset in better that's that in the the less to what out be business in as doesn't financial sale-in seeing that you numbers I Vans. But a sell-through is results if is And do won't where continue a of in the imply. most generally, generally noise Vans be maybe and true. Certainly, results time toward across than that place we little wholesale We're across the wholesalers stronger, would the point some pretty

sellout certainly that good, be the better, in we're continues a not is with. right? It So place a not but to still bit little happy

saying, sell-out continues probably but goes Supreme strong. without to That be very

of I'd place Yes. said where positioned. little earlier, bit a probably than particularly an higher I inventory a -- we're marketplace standpoint. there's little only from thing we be. the board inventories think Timberland, Europe. the couple like pockets, good I Europe to well The is a about is as across the a are But U.S., say really in Europe in

As is the Asia, by way.

Stifel. question comes with the from next Our Jim Duffy of line

on to review. want the in portfolio I dig Bracken,

fit. sacred was deemed give no news. shop us message The portfolio doesn't are appointed aline, to you review then in brands the Am the short I leaders brands unstrategic? And Your I as a when of outlined, where process? the of suggests cows, last you've quarter like realignment correct cetera. possible? et large-scale think about announcement of you criteria sense new the of been list bores a Can banks it Have portfolio that, seem to growing markets, markets interpret that seems of in a kind that

things come will on out for say that that that But go than I just really with this it. along. talking that working we've that wouldn't I -- would don't aren't I to do regularly That's right been about far. been of longer you're we so pretty we've kind try the well

are don't have do haven't that we know along hear And discussion way on this downstream well beyond as from review. we of, I to bankers hired portfolio So the certainly discussions And while we more it a portfolio the say you what but exactly standpoint. that about we're now, more on comes. you'll on

realignment. of inventory then in up clean a us to understand what maybe were the mechanics you to help Can channel. maybe And just Vans the better means. that tactics What on Okay. the question try the specific

would in the but on If on helpful. like sales, you more, explain inventory. context, curious, how miss could that be that I'm over-deliver And did you

Yes.

Let tapping also We then me one, Matt essentially it's answer X that can try and to steps. in help. --

kind our that we're quarter. what this in X was doing are the the one is selling not quarter. really next the in too last the first -- will be inventory The The pulling channel. is second that quarter, of And high icons

So that they're the returning product that basically we're selling. out we're to back or opening then open for is it, and an pulling up buy

just really it's cleaning the channel. out So

You to Matt? anything that, add want about

returns a impact there's right, an returns bring this case. of Jim, bit when mean, you're in accrue inventory you or back for little I

is for you're think happening, has cases, returns, is the the implication I accruing product flowing entry. That's in kind inventory number. the most and of in but that an in still which work

in space. as able some I stores, in think aggressively we've outlet within excess been through to off-price in working just the again, play which our channel inventories, some Working cases, in little aggressively planning leveraging, along, we particular, probably overall, well of wholesale to the pull sell own ultimately out. buys, conservative terms back said on all that in and may our been a we're bit to do of as

a So well. favorability of little bit there as

of a in new example over the it tell we quick [indiscernible] a I couldn't had you give me I'll the is sica had we several buy sizes available started doing this the get impact product -- yet, holidays, is yes. in before because they school reset. people their wasn't overstocked couldn't inventory

clean that So up. this should

Jay comes UBS. next question Our of from with line the Sole

have [indiscernible] questions. X help. really I

How full. really recent really first teams and -- the people is, you're are having The go-forward Bracken, promoting you team about far talked X along question from teams. the you

this the you flow now from little income for or probably on words, more the sounds it before expected but are like like free on it there's inventory, a that. some other asset sales that than So Matt, impacting some place and net more guidance, core many about you in cash like other is there's before, then bit sounds less feel how months working maybe like, it's executing? And in okay, team

of would just a you be If math us terms, the guidance give qualitative us same, the how just on do cash little free in help like the helpful. could sort pieces flow that

lot I hard question a a would say of to already. made changes we've That's answer.

next I this now the our turnaround. operating think So has of our year, of poised will having an far structure QX, we in forward. And be team company bit. that think has are terms All fiscal into things The really move a aggressively model. of quite changed as evolved beginning is those we organization as win rolling forward especially it a to enter bit the in I quite along very

it. that And a months, we're excited we'll roll along. feel So we couple Jay, a I have forward is team pretty I'm -- be here there. and win. really of I'd about say far can like to I think we

talked Yes, Jay, line. Outdoor probably this what the to I about described standpoint, quarter how segment bit from is than but better a it relative little fair anticipated. the on We you a inventory tougher revenue we that think

lot the right? you the as levers there's on are not on there, a think balance think free flow And in P&L, I cash look when the right? And the CapEx. Honestly, the sheet, suggest you accounts period, year-to-go biggest assets, that free all about way, not only line. that receivable, kind et We're wouldn't cetera, the cash counting inventory, flow below it but of liabilities, of not that's I necessary. at

the still the think, I line we But So really to schedule. particularly takes, for third quarter few at that's ahead the not of the a in in puts the see great are we're number. by but million, really where end and encouraged $XXX of inventory,

back how I If Jay, we're could about first the just use your fast side. to the go question, comment moving maybe make org question on to a

is Head a we -- new of by so -- of design of been CHRO, the agreed I've a year. That the people, next the of fiscal be have the new kind beginning -- an of end to. head leaving. new of fiscal which by within promotion. We'll have Commercial, have That's here, We since internal will head

So early we'll at some in next have a point CFO new the year.

head a a of Timberland. of We'll new have head have We new Vans.

changed team in lot a people during here. lot time company So changed will have the of promoted this -- frame. and we've that a a lot actually we of

it's stronger we to and I'm think and I about going the place, team excited So stronger. really in have get

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

it improved each side? store how which the more DTC digital the physical for out wholesale, are than performance is channel? any channel, As what brand differ your talk there plans does of you there in seeing DTC any on -- you're brand by you DTC And about differentiation are about and think color what the is by

Vans U.S.-based brick-and-mortar business. A especially well lot we're an not of -- people bricks sizable that business the say the and sizable -- as DTC a I'd Vans, -- I'll everybody a varies the world. mortar, really a footprint. brand -- it very not has developed has e-com start X DTC brand and and as has online most large, in not with around may realize every In businesses. every every of

Our North XX% like mean America total even higher I something all footwear business DTC is developed in of X we're the of the DTC maybe our in apparel. of business businesses most and U.S., that. than

it's I each other. grow will e-com brick and developed. bricks the wholesale way and that one to shrink own or to mortar and the expect dramatically very imagine I And hopefully, relative grow to will relative will other. bricks the mortar. to begin don't So our the changed

Face, that. The in great have mostly U.S. that North expect e-comm DTC can you would be bigger. So a I It's the business even

all true the We But I our I second. Timberland the in a of DTC stores, keep if developed that have U.S. out APAC be has relatively more and stores speaking, the a core own going kind But we any right. probably will Europe businesses have think, control. the our for strategy. case, little in very adding the a continue. to say, U.S., a facts would in business. those in very going part And e-com are going think in holding we're It's things I'm generally don't is U.S., think with I that that have change Europe, that. wholesale, all I of to have larger of And very, larger business, Europe. speaking, less my to plans of And very would here business I that's struggle big U.S., in we in bricks-and-mortar to X in and little which

on you're And about just then it. thinking for Got changes side year, CapEx forward? the this any it to and how going CapEx

an a we're thinking think plan big have We in investment a don't CapEx. alter don't we CapEx, I plan abnormal. about the have No, at way significant to not least

will kind of Face the we're be of CapEx in in to planned. kind of nothing for where kind our Supreme one cases, it's have opposite. and We'll to support of stores. working our related is Dana. expansion opportunities one. many is sure. expansion be the those the obviously, that aggressively North significant And reduce makes refreshment brands it ongoing Infrastructure-wise, footprint Most moving the forward of DTC, to and continuing honestly, sense

question of from line Bracken. Ike the final Our Fargo. with comes Boruchow Wells

North So me. guess, maybe first for X Matt, X Face. just questions on is I the

shifts know So you're just on extra being trying January the North guidance, -- down mid-single I to the to the positive. even marry trying specifically, space not quarter, but the comment on fully understand with giving

that much Just cold. -- January read of not we because should too into the

big a just question secret of the that from all options thoughts review? to portfolio to Are to kind brand to here? And about any on X So fair direct no on be curious, of now? Bracken, table Or us, trajectory not the I'm just I it the the Jim's is but mean, too brands are strategic is not right say part the everything? then

update been than going we when not no an said all explicit about about We it we'll objective that meant and taking look brands. And to We've other address we're comment. come very saying you so Any that, sacred that. the we're question at time. cow back really over

early look North to the grow, the and strong good as as the the think the in business back DXC to expect and quarter, as we question January, bounce to I and Face, weather on degree some the part see to continue DXC DXC Europe to we well. fourth your of we particularly to expect we January, forward, It's here turned expect grow really in grow. in

got said, going is will fall book understanding pretty So wholesale -- We've -- and choppy. we've order but and that out for what look what of be is like. obviously good to play going visibility pretty spring shape to how

So that difficult to few next more quarters. the we'd expect over be

piecemeal I'm sorry that I want don't answer. just to out

a it more to need later. we think complete way give I

last question. earlier. I am clearly results, these the for in. of tuning super thanks disappointing Well, I was That you said right. all Okay. future, All Despite VF's about excited as

you it, before, business. amazing rebuild in can't talent. certainly the internally, and we're see world-class have happening the this you to here even it yet said we probably brands The is things though on our real feel The change have the can't around great it taking ways think to to are implementation happening. is I steps and are turn fast foundations numbers. I've a

thank the this close as fiscal quarter you I during So next and And and Thanks the again. we to look to quarter start talking year. next Matt, again you. forward

Thanks, Bracken. Thanks, everyone.

today's concludes This teleconference.

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