Q4 2024 V.F. Corp Earnings Call

Operator: Hello, and welcome to the VF Corporation fourth quarter 2024 earnings call. If anyone should require operator assistance, please press star zero on your telephone keypad.

Hello, and welcome to the V F Corporation fourth quarter 2024 earnings call. It's really what's at the prior operator assistance. Please press star zero on your telephone keypad.

Operator: Our question and answer session will follow the formal presentation. We ask you please limit yourselves to one question. You may be placed into the question queue at any time by pressing star 1 on your telephone keypad.

A question and answer session will follow the formal presentation. We ask you. Please limit yourselves to one question.

Placing the question queue at any time by pressing star one on your telephone keypad as a reminder, this conference is being recorded.

Operator: As a reminder, this conference is being recorded. It's now my pleasure to turn the call over to Vice President of Investor Relations, Allegra Perry. Please go ahead, Allegra.

Speaker Change: Now my pleasure to turn the call over to the Vice President of Investor Relations Allegra Perry. Please go ahead of it.

Speaker Change: Good afternoon, and welcome to VF Corporation's fourth quarter fiscal 2024 conference call participants on today's call will make forward looking statements. These statements are based on current expectations and are subject to uncertainties that could cause actual results to differ materially. These uncertainties are detailed in docs.

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

Speaker Change: Humans filed regularly with the SEC.

Speaker Change: Unless otherwise noted amounts referred to on today's call will be on an adjusted constant dollar basis, which we defined in the press release that was issued this afternoon, and which we use as lead numbers in our discussion because we believe they more accurately represent the true operational performance and underlying results of our business. You may also hear us refer to reported them.

Speaker Change: Mounts, which are in accordance with U S. GAAP reconciliations of GAAP measures to adjusted amounts can be found in the supplemental financial tables included in the press release, which identify and quantify all excluded items and provide management's view of why this information is useful to investors.

Speaker Change: Joining me on the call will be Vf's, President and Chief Executive Officer, Bracken, Darrell EVP, Chief commercial officer, and President emerging brands Martino, Scott Greenie, and EVP and Chief Financial Officer, Matt Puckett. Following our prepared remarks, we'll open the call for questions.

Allegra Perry: You may also hear us refer to reported amounts which are in accordance with U.S. GAAP. Reconciliations of GAAP measures to adjusted amounts can be found in the supplemental financial tables included in the press release, which identify and quantify all excluded items and provide management's view of why this information is useful to investors. Joining me on the call will be VF President and Chief Executive Officer Bracken Darrell, EVP Chief Commercial Officer and President of Emerging Brands Martino Scaviagorini, and EVP and Chief Financial Officer Matt Puckett. Following our prepared remarks, we'll open the call for questions. I'll now hand over to Bracken.

Speaker Change: I'll hand over to Bracken.

Bracken P. Darrell: Thanks, so much for joining us I finished 10 months here and we've made a lot of progress.

Bracken P. Darrell: Thanks so much for joining us. I've finished 10 months here, and we've made a lot of progress. I'll begin today with a deep dive on our re-invent program and why I'm confident we'll position VF to return to strong, sustainable growth. Then I'll briefly touch on our financial results before turning it over to Martino and Matt. Well, I've discussed reInvent on our prior calls, but I'd like to go a few layers deeper today so you can have a better understanding of how we're approaching this, the progress we've made so far, and what's next. Almost everything is playing out as I expected it would when I took the role.

Bracken P. Darrell: I'll begin today with a deep dive on our reinvent program and why I'm confident will position VF to return to strong sustainable growth then I'll briefly touch on our financial results before turning it over to Mark you know in that well.

Well that was discussed on our prior calls I'd like to do a few layers deeper. So you can have a better understanding of how we're approaching this the progress you've made so far and what's next.

Bracken P. Darrell: Most everything is playing out as I expected when I took the role.

Bracken P. Darrell: We've taken the tough medicine that we needed to return to growth. Key organizational changes, leadership changes, and strategic moves have largely been implemented by the time we get to the end of my first year, and I feel really, really good about that. ReInvent, which we introduced back in Q2, is fundamentally how we get back to strong growth. Some perceive this as a simple restructuring plan or tactical steps. It wasn't, and it isn't.

Bracken P. Darrell: Taken the tough medicine that we needed to return to growth key organizational changes leadership changes and strategic moves have largely been executed by the time, we get to the end of my first year and I feel really really good about it.

Bracken P. Darrell: Re event, which we introduced back in Q2 is fundamentally how we get back to strong growth.

Some perceive this as a simple restructuring plan with tactical steps it wasn't it isn't reinvested as a blueprint for transforming our company from declining to grow them.

Bracken P. Darrell: Reinvent is a blueprint for transforming a company from declining to growing. It has three key phases running in parallel: reset, Ignite, and Accelerate. Reset is focused on a reset of the U.S. business, vans, the cost base, and the balance sheet. Ignite is about elevating how we show up in front of the customer. Here, our focus is on product. Design, Innovation, and Merchandise; on Commercial Excellence and Brand Building. Our reset and ignite phases are occurring in parallel, and together they'll set the stage for the third phase, which will be accelerating growth. Before I get into details on the reset phase, let me talk a little bit about people.

Bracken P. Darrell: It has three key phases running in parallel reset.

Bracken P. Darrell: Right and accelerate.

Bracken P. Darrell: Reset is focused on a reset for the U S business bans the cost base and the balance sheet.

Bracken P. Darrell: Ignite is about elevating how we show up in front of the customer.

Bracken P. Darrell: Here, our focus is on product design innovation and merchandising.

Bracken P. Darrell: On commercial excellence and brand building.

A reset and ignites phases are occurring in parallel and together will set the stage for the third phase, which will be accelerating growth.

Bracken P. Darrell: Before I get into details on the reset phase, let me talk a little bit about people.

Bracken P. Darrell: No turnaround happens without a strong team, and I've spent an enormous amount of time on this particular area. You have a CEO with a demonstrated turnaround and long-term demonstrated growth experience, and we are adding superstar talent. Our new CHRO is the former CEO of Salesforce, a company 50 times larger than VF who also happens to have deep retail and apparel experience. Our new head of strategy and digital was a managing partner of BCG and spent time at Lululemon.

Bracken P. Darrell: <unk> turnaround happens without a strong team and I have spent an enormous amount of time on this particular area.

Bracken P. Darrell: You have a CEO with a demonstrated turnaround and long term demonstrated growth experience and we are adding superstar talent.

Bracken P. Darrell: Our new C. H R O B performance EHR Salesforce company 50 times larger than be US, who also happens to have deep retail and apparel experience.

Bracken P. Darrell: Our new head of strategy and digital was a managing partner BCG and spent time at Lululemon.

Bracken P. Darrell: Our new head of design was named by McKinsey and others as one of the top creative design leaders in the world. And we announce today that Paul Vogel is our new CFO. Paul brings a wide range of financial, operational, and capital markets experience. We plan to announce very soon a new Vance president.

Bracken P. Darrell: Our new head of design was named by Mckinsey and others is one of the top creative design leaders in the world.

Bracken P. Darrell: And we announced today, Paul Vogel as our new CFO.

Bracken P. Darrell: Paul brings a wide range of financial operational and capital markets experience.

Bracken P. Darrell: We plan to announce very soon a new vans, president ammar promoting strong internal talent, including Martino and our new timberland present, neither flood.

Bracken P. Darrell: And we're promoting strong internal talent, including Brooke Martino and our new Timberland president, Nima Flood. By the time I reach my one-year anniversary at VF in July, we'll have almost completely changed the leadership of the company. I have great confidence that we have the right team in place to successfully drive VF's turnaround and long-term growth. Now, turning to an update on our key priorities under the reset phase I spoke about earlier. We are on track to deliver our $300 million cost savings target by the middle of the fiscal year, as previously discussed.

Bracken P. Darrell: By the time you reach my one year anniversary of V. F. In July we will have almost completely changed the leadership of this company.

Bracken P. Darrell: Great confidence, we have the right team in place to successfully drive these turnarounds and long term growth.

Bracken P. Darrell: We're also making progress on reducing debt and strengthening our balance sheet. In the fourth quarter, we delivered another significant reduction in inventories, bringing the total for the year down 23%, down over $500 million, which in turn enables us to reduce our net debt by another $540 million.

Bracken P. Darrell: Now turning to an update on our key priorities under the recent phase I spoke about earlier.

Bracken P. Darrell: We're on track to deliver our 300 million dollar cost savings target by the middle of the fiscal year. As previously discussed we're also making progress on reducing debt and strengthening our balance sheet.

Bracken P. Darrell: In the fourth quarter, we delivered another significant reduction in inventories, bringing the total for the year down 23% down over $500 million, which in turn enabled us to reduce our net debt by another $540 million.

Bracken P. Darrell: We also generated over a billion dollars in operating cash flow and more than 800 million dollars in free cash flow, exceeding the only guidance we gave you earlier. Our strategic portfolio review is complete, and we'll provide an update when we have more reviews to share. We've established the Americas Regional Platform, which is now fully in place and operational as part of the Global Commercial Organization. Under Martino's strong leadership, we are already seeing signs of progress.

Bracken P. Darrell: We also generated over $1 billion in operating cash flow of more than $800 million in free cash flow exceeding the only guidance. We gave you earlier.

Bracken P. Darrell: Our strategic portfolio review is complete and will provide an update when we have more views sure.

Bracken P. Darrell: We've established the Americas regional platform, which is now fully in place and operational as part of the global commercial organization under.

Bracken P. Darrell: Under Martino strong leadership, we are already seeing signs of progress.

Bracken P. Darrell: We've imported a key processor from EMEA and APAC. The accuracy of our forecasting has dramatically improved, and Martina will talk through the actions we're taking to improve America's performance in more detail. Let me move the van.

Bracken P. Darrell: We have important key process for EMEA and APAC the accuracy of our forecasting is dramatically improve and Martina will talk through the actions, we're taking to improve the Americas performance in more detail.

Bracken P. Darrell: Let me move to vans.

Bracken P. Darrell: While overall financial results have not yet improved, we are deep in execution, and we are starting to see very early green shoots. I said you'd start to see the brand turn first in one channel or region, and it would spread to others. It started to happen with DTC Europe positive in the quarter.

Bracken P. Darrell: While overall financial results have not yet improved we are deep in execution and we are starting to see very early green shoots.

Bracken P. Darrell: I said you'd start to see the brand turn first in one channel or region and it would spread to others. It started to happen with DTC Europe positive in the quarter.

Bracken P. Darrell: The Inventory Reset Actions are helping create a cleaner market in which to introduce new product. Our weeks of supply have come down with our partners in all three regions. We're simplifying our product lineup and introducing a sustained level of investment in design and innovation. Ultra Range NEO is performing well in the U.S. The new school, which launched when I first got here, is gaining strength behind enhanced marketing and has now become our second largest style globally.

Bracken P. Darrell: The inventory reset actions are helping create a cleaner market.

Bracken P. Darrell: To introduce new product our weeks of supply come down with our partners in all three regions, we're simplifying our product lineup and introducing a sustained level of investment in design and innovation.

Bracken P. Darrell: Ultra range, Neil it's performing well in the U S. The new school, which launched when I first got here is gaining strength behind enhanced marketing has now become our second largest style globally.

Bracken P. Darrell: And the A2.0, our newest and best skate shoe, has performed very well in the early months of its life. You can expect more news here soon, too. This is part of our ICON management strategy, which will also reduce reliance on CORI. While the core remains in decline, we're seeing strong performance in our new products, and we have a cascade of product launches coming. We're also working to make our marketing efforts more effective.

Bracken P. Darrell: The H two pointed out our newest and best case U S performed very well in the early months of its launch.

Bracken P. Darrell: You can expect more news here soon to this as part of our icon management strategy, which will also reduce reliance on core eye drops.

Bracken P. Darrell: While the core remains a decline we're seeing strong performance in our new products and we have a cascade of product launches coming.

Bracken P. Darrell: Also working to make our marketing efforts more effective.

Bracken P. Darrell: We're simplifying our storytelling. Our marketing is shifted to fewer, deeper campaigns. For example, we used to have 274 stories in one season. When you have 274 stories in 6 months, you're probably not telling any of them well.

Bracken P. Darrell: We're simplifying our storytelling, our marketing has shifted to fewer deeper campaigns. For example, we used to have 274 stories in one season when.

Bracken P. Darrell: When you have 274 stories in six months, you, probably not telling any of them well we've simplified it to a handful of powerful key stories concentrating our investments. We're also rebalancing our marketing mix to drive higher ROI.

Bracken P. Darrell: We've simplified it to a handful of powerful key stories, concentrating our investment. We're also rebalancing our marketing mix to drive higher ROI. These changes are starting to show positive results. Now we're cutting through.

Bracken P. Darrell: These changes are starting to show positive results.

Bracken P. Darrell: Now, we're cutting through search as a good leading indicator, we're seeing Google search trends move in the right direction for the first time in years. The last three months of improved compared with previous 12.

Bracken P. Darrell: Search is a good leading indicator. We're seeing Google search trends move in the right direction for the first time in years. The last three months have improved compared to the previous 12. We don't only need simplification; we also need brand elevation to build brand equity and drive growth. We're leveraging our new OTW line as the pinnacle expression of the brand to drive energy and excitement. We're in the middle of a global series of events that bring together community, culture, and fashion that will continue to unfold.

Bracken P. Darrell: We don't only need to have simplification. We now see also need brand elevation to build brand equity and drive gross margin.

Bracken P. Darrell: We're leveraging our new OTW life is the pinnacle expression of the brand to drive energy and excitement.

Bracken P. Darrell: In the middle of a global series of events that bring together community culture and fashion that will continue to unfold.

Bracken P. Darrell: That's how we get in the middle of cultural trends. After the tease on June 23rd at Men's Paris Fashion Week, we officially launched OTW at Art Freeze in Los Angeles in February of this year, with an amazing installation to drive brand elevation. And just last week, we had an exciting event on the Shanghai Bund that generated huge interest in person and on social media. Stay tuned for more.

Bracken P. Darrell: That's how we get to the middle of cultural trends.

Bracken P. Darrell: After the teas in June 23rd it means Paris fashion week, we officially launched OTW at art freeze in Los Angeles in February of this year with an amazing installation to drive brand elevation.

And just last week, we had an exciting event on the Shanghai Budd.

Bracken P. Darrell: Generated huge interest in person and on social media staying.

Bracken P. Darrell: Stay tuned for more.

Bracken P. Darrell: We have a strong and data-driven approach now to improve our in-store execution, and you'll see more as we roll it out across the year. I'm a big believer in testing, learning, and scaling, and stores are a wonderful place to do it. We're testing a lot of things across regions in areas of visual merchandising, four-wall formats, and SKU productivity that will scale across the globe over time. Advanced, we've moved from theory to action. Now, let's talk about the North Face.

Bracken P. Darrell: We have a strong and data driven approach that improve our in store execution, you'll see more as we look across the year I'm a big believer in testing learning and scaling of stores are a wonderful place to do it we're testing a lot of things across regions and areas of fridge or merchandising four wall formats, and SKU productivity, we will scale across the globe over time.

Bracken P. Darrell: Advanced we've moved from theory to action.

Bracken P. Darrell: Now, let's talk about the north face are core focus there has been investing in product design and merchandising are key growth drivers include category expansion with specific focus on trail hike womens and footwear were started to elevate the brand through premium performance products are.

Bracken P. Darrell: Our core focus there has been investing in product design and merchandising. Our key growth drivers include category expansion with a specific focus on trail and hike, women's, and footwear. We're starting to elevate the brand through premium performance products. Our pinnacle expression of the brand, Summit Series, is leading the way through brand campaigns and in-store activations across all marketplaces. This is connected to elevating our brand journey through new store designs, which are currently being tested and scaled across the globe. A few select examples of these include the Regent Street store experience.

Bracken P. Darrell: Our pinnacle expression of the brand some series is leading the way through brand campaigns and in store activations across all marketplaces.

Bracken P. Darrell: This is connected to elevating our brand journey through new store designs, which are currently being tested and scaled across the globe.

Bracken P. Darrell: A few select examples that use the regent Street store experience.

Bracken P. Darrell: Our new store format in Berlin and Singapore, and soon we'll have one in Shanghai. Our key global partners are fully involved in this initiative, too. We'll talk more about the final phase, Accelerate, in the coming quarters, but it's too early to talk about it now. So what can you expect as we move into fiscal 25? While we're not ready to give specific quantitative guidance, I can tell you that you can expect that things will be a little bit better sequentially each quarter.

Bracken P. Darrell: Our new store format in Berlin in Singapore, and soon we'll have one in Shanghai.

Bracken P. Darrell: Our key global partners are fully involved in this initiative too.

Bracken P. Darrell: We'll talk more about the final phase accelerate in the coming quarters, but it's too early to talk about it now.

Bracken P. Darrell: So what can you expect as we move into fiscal 'twenty five.

Bracken P. Darrell: We're not ready to give specific quantitative guidance, but I can tell you that you can expect things will be a little bit better sequentially each quarter.

Bracken P. Darrell: Except for the first quarter, as we complete our channel inventory resets, and Matt will tell you more about that later. To close my section, I'm more confident than ever about our plans and our execution. We will return the company to long-term profitable and sustainable growth. Now, let me hand over to Martino, who will give an update on our global go-to-market approach.

Bracken P. Darrell: Except for the first quarter as we complete our channel inventory resets and Matt will tell you more about that later.

Bracken P. Darrell: To close my section I'm more confident than ever about our plans and our execution.

We will return the company to long term profitable and sustainable growth.

Speaker Change: Now, let me hand over to Martina, who will give an update on our go to market approach globally.

Martina: Thank you Bracken and good day, everyone nice to speak to you again in my new role as Chief commercial officer of yes, what oversee our newly created global commercial organization and our emerging brands today I'm going to give you. Some additional details on our key priorities within this new operating model. These details will be primarily sac was under Medicare.

Martino Scabbia Guerrini: Thank you, Bracken, and good day, everyone. Nice to speak to you again in my new role of Chief Commercial Officer at VF, where I oversee our newly created global commercial organization and our emerging brand. Today, I'm going to give you some additional details on our key priorities within this new operating model. These details will be primarily focused on the Americas, the region where we see the biggest incremental opportunities and we stand to benefit the most from leveraging processes and tools that have led to commercial success in Europe and Asia. Three key messages I want to leave you with.

Martina: The region, where we see the biggest incremental opportunities and we stand to benefit the most from leveraging processes and tools that have less commercial success in Europe and Asia.

Martina: Three key messages I want to leave you with one well driving our integrated marketplace strategy with speed and agility and clear focus on our best wholesale partners too we're elevating our recent execution and DTC direct to consumer across brick and motor and digital three driving commercial excellence.

Martino Scabbia Guerrini: One, we're driving our integrated marketplace strategy with speed and agility and a clear focus on our best wholesale partners. Two, we're elevating our retail execution in D2C, direct-to-consumer, across brick-and-mortar and digital. Three, we're driving commercial excellence through our operating model, scaling new capabilities and best practices across. First, integrated multiplexing.

Martina: Our operating model scaling new capabilities and best practices across the regions.

Martina: First integrated marketplace strategy integrated marketplace strategy is and holistic view across the chinas to elevate our brand execution and capture consumer's engagement at every touch point.

Martino Scabbia Guerrini: Integrated Marketplace Strategy is a holistic view across the channels to elevate our brand execution and capture consumers' engagement at every touchpoint. We see opportunities to perform better across wholesale and D2C. We're making clear choices, and we're executing intensely against those choices in each region and across brands. As the market cycle adjusts and inventories return to normalized levels, impeccable marketplace execution is critical to take back market share and drive growth across the portfolio, starting from our Americas region, even more than anywhere else.

Martina: We see opportunities to perform better across wholesale and DTC, we're making clearer choices and we executed intensely against those charges in each region and across brands.

Martina: As the macro cycle adjust and inventories returned to normalized levels and impeccable marketplace as a cushion as critical to take back market share and drive growth across the portfolio starting from our Americas region, even more than anyone else.

Martino Scabbia Guerrini: We continue to see a strategic place for wholesale in our model, and we believe we can be much stronger with key strategic partners. As we roll out our regional commercial model and transfer best practices across regions, our immediate focus is on establishing robust marketplace management processes in the Americas, supported by more agility in decision making. These efforts are squarely focused on driving growth in the short to medium term, but we expect them to also lead to higher tiers of distribution, a less promotional approach to the marketplace, and, in turn, a more elevated brand position. You've heard us talk about our global plan.

Martina: We continue to see a strategic place for wholesale in our model and we believe we can be much stronger with key strategic partners as we rollout our regional commercial model and transfer best practice across the region. Our immediate focus is on establishing a robust marketplace management processes in the Americas supported by more agility.

Martina: Decision, making these efforts are squarely focused on driving growth in short to medium term, but we expect them to also lead to higher tiers of distribution and less promotional approach to the marketplace and in turn more innovative brand positioning.

Martina: You've heard us talk about our global partnerships.

Martino Scabbia Guerrini: We work with some of the best multi-brand retailers and partners in the business. They love our brands, and they want to work with us to bring them to our consumers in a way that drives a deeper connection and builds brand equity in the product. We are intensely focused on making this partnership tighter and more effective, adopting some of the processes that have made our business in Europe and Asia successful, such as cross-brand key account governance executives. Over the last eight months, we have invested significant time in the Americas, meeting our partners to create a strategic long-term framework and optimize our common commercial priorities. It is time to do your part.

Martina: Work with some of the best multi brand retailers and partners in the business. They love our brands they want us to work with us to bring them to our consumers in a way, which drives a deeper connection and build brand equity in the process. We are intensely focused on making this partnership tighter and more effective adopting some of the processes that have made.

Our business in Europe, and Asia successful, such as cross brand key account governance execution.

Martina: Over the last eight months, we have invested significant time in the Americas meeting our partners to create a strategic long term frame and optimize our common commercial priorities. It is starting to yield results.

Martino Scabbia Guerrini: Second, Brand Elevation and Retail Expansion. We are moving fast across all areas of our new commercial organizations. In our direct-to-consumer environment, we are definitely under-examined in the Americas relative to Europe and Asia in terms of commercial performance as well as retail activity.

Martina: Second brand elevation and retail execution.

Martina: We are moving fast across all areas of our new commercial organizations in our direct to consumer environments, we definitely under executed in Americas relative to Europe, and Asia in terms of commercial performance as well as retail excellence. As an example, we are adopting a more consistent and dynamic of regional approach to our retail fleet optimization.

Martino Scabbia Guerrini: As an example, we are adopting a more consistent and dynamic regional approach to our retail fleet optimization, a faster pace of retail innovation through new formats, and rolling out consumer-facing omni-channel capabilities. As we focus on elevating our brands, we're bringing retail execution and in-store experiences to the forefront. We need great designs and the right merchandising decisions to show up consistently across retail environments with the right mix of global and local relevance.

Martina: The faster pace of retail innovation through new formats, and rolling out consumer facing omnichannel capabilities.

Martina: As we focus on elevating our brands will bring in recent execution and in store experiences to the cellphones, we need great designs and the right merchandising decisions to shut up consistently across retail environments with the right mix of global and local relevance and we need operational excellence and a giant trading capabilities we have.

Martino Scabbia Guerrini: And we need operational excellence and agile trading capabilities. We are seeing success with some of our new store concepts, for example, the North Face in London, Vans in Shanghai, and Timberland in Tokyo. And we're taking a hard look at how the e-commerce digital experience connects and expands through the physical expressions of our brand. Third, and finally, excellent commercial executives.

Martina: <unk> success with some of our new store concepts for example, the north face in London, and Shanghai Timberland in Tulsa, and we've taken a hard look on how e-commerce digital experience connect and expands so the physical expressions of our brands.

Martina: Third and finally excellent commercial execution as.

Martino Scabbia Guerrini: As we ignite growth across business models, direct and partners, digital and physical, we are removing silos and barriers that get in the way of effective commercial aggregation. Through our commercial platforms, we are integrating trading execution, marketing, and domain creation, and planning discipline to drive the business and optimize the use of our inventory across all channels. Analytical capabilities and more power inside will also contribute to our ability to be demand-driven across the whole market. This improves our ability to predict with more accuracy where the business is headed. And in fact, we have now hit our internal forecast in the Americas for five consecutive months.

Martina: <unk> growth across business models direct and partners. These stunning physical we're removing silos and barriers to get into way of effective commercial execution.

Martina: Our commercial platforms, we are integrating trading execution marketing and demand creation and planning discipline to drive that business and optimize the use of our inventory across all channels and analytical capabilities and the power of these sites will also contribute to our ability to be demand driven across the whole marketplace.

Martina: This improves our ability to predict with more accuracy, what the business is headed and in fact, we have now hit our internal focus in the Americas for five consecutive months.

Martino Scabbia Guerrini: We're seeing cleaner inventory positions at our brands following the select reset actions, and more importantly, we're driving specific VF-wide growth initiatives with our key accounts in all the regions. Last but not least, we are the proud owners of several emerging brands, delivering substantial total sales and a creative operating model. There are some real jewels here, and in our new operating model, these are now managed in an even more entrepreneurial, dynamic way to catch market and category opportunities and create the best version for a bigger future. So we're making progress at every step, focusing on improving our operations and returning to drive commercial excellence and best brand excellence. Thank you for your time. I'll now hand over to Matt.

Martina: We're seeing cleaner inventory positions at our brands. Following also the select reset actions and more importantly, what's driving specific UBS wide growth initiatives with our key accounts in all the regions.

Martina: Last but not least we have the proud owners of several emerging brands delivering substantial total sales and accretive operating margins.

Martina: There are some real jewels here and in our new operating model. These are now managed in an even more entrepreneurial dynamic way to catch market and category opportunities and crew.

Martina: We ate the best version into bigger social plan.

Speaker Change: So we're making progress at every step focusing on improving our operations and return it to drive commercial excellence and best brand execution. Thank you for your time and now I'll hand over to Matt.

Matthew H. Puckett: Thanks, Martino, and good afternoon, everyone. My plan today is to give you a high-level overview of Fiscal 24, a more in-depth review of Q4 results, and highlight some themes for our key areas of focus and some guardrails for Fiscal 25. We close out our fiscal year having made further progress on the initial phase of re-invent. And even though our fiscal year 24 P&L results remain difficult, with revenue down 11% and adjusted earnings per share of 74 cents, we delivered against our near-term balance sheet and cash flow objectives.

Matthew H. Puckett: Thanks, Martina and good afternoon, everyone.

Matthew H. Puckett: <unk> today is to give you a high level overview of fiscal 'twenty for a more in depth review of Q4 results and highlight some themes for our key areas of focus and some guardrails for fiscal 'twenty five.

Speaker Change: We closed out our fiscal year, having made further progress on the initial phase of reinvent and even though our fiscal year 2004, P&L results remained difficult with revenue down 11% and adjusted earnings per share of <unk> 74.

Speaker Change: We delivered against our near term balance sheet and cash flow objectives.

Matthew H. Puckett: We exceeded our free cash flow guidance, largely driven by lower working capital, namely inventory, with $804 million generated for the year, which I'll cover in more detail in a minute. Now, turning to our fourth quarter results, which were largely in line with our expectations. Throughout Q4, we continue to take proactive measures to improve our operating performance and strengthen our business and balance sheet while implementing additional actions as part of the Reinvent Transformation Program. We have advanced the work against the Strategic Portfolio Review, which is now complete, and are on track with our plans to continue paying down debt and strengthening our balance sheet.

Speaker Change: We exceeded our free cash flow guidance, largely driven by lower working capital, namely inventory with 804 million generated for the year, which I'll cover in more detail in a minute.

Speaker Change: Now turning to our fourth quarter results, which were largely in line with our expectations.

Speaker Change: Throughout Q4, we continue to take proactive measures to improve our operating performance and strengthen our business and balance sheet, while implementing additional actions as part of the reinvent transformation program we.

We advanced the work against the strategic portfolio review, which is now complete and are on track with our plan to continue paying down debt and strengthening our balance sheet.

Matthew H. Puckett: While the underlying financial results from Q4 remain challenging, there was a slight sequential improvement relative to last quarter, and importantly, we've seen some encouraging developments stemming from the recent actions we have taken. Now, let's unpack the performance, starting with the areas we guided on, inventory, cash flow, and liquidity, where we delivered stronger results than anticipated. First, on inventory, we've made significant progress in the quarter, a direct benefit of our ongoing efforts to clean up the marketplace and operate with a more efficient level of inventory across each of our businesses.

Speaker Change: While the underlying financial results from Q4 remain challenging there was a slight sequential improvement relative to last quarter and importantly, we've seen some encouraging developments stemming from the recent actions we've taken.

Speaker Change: Now, let's unpack the performance starting with the areas, we guided on inventory cash flow and liquidity, where we delivered stronger results than anticipated.

Matthew H. Puckett: Inventory declined by 23% in the quarter versus last year, ahead of our expectations, with double-digit declines across each of the four largest brands. We're also seeing an improvement in the level and health of our inventory with our wholesale partners. Turning to the highlight of our financial results, cash flow. As Bracken mentioned, during the fiscal year, we generated over $1 billion in operating cash flow and $800 million of free cash, ahead of our 600 million competitors.

Speaker Change: First on inventory, we've made significant progress in the quarter, a direct benefit of our ongoing efforts to clean up the marketplace and operate with a more efficient level of inventories across each of our businesses inventory declined by 23% in the quarter versus last year ahead of our expectations with double digit declines across each of the four largest brands were all.

Speaker Change: Also seeing an improvement in our level and health of our inventories with our wholesale partners.

Speaker Change: Turning to highlights of our financial results cash flow.

Speaker Change: As Bracken mentioned during the fiscal year, we generated over $1 billion in operating cash flow and $800 million of free cash flow ahead of our $600 million guidance.

Matthew H. Puckett: This result allowed us to continue making progress against one of our biggest priorities, reducing debt, as we ended fiscal year 24 with net debt of about $5.3 billion, down approximately $540 million versus last year. The free cash flow beat was largely driven by lower working capital, primarily inventory, as we were able to bring those levels down more quickly than projected. Liquidity at the end of the year was approximately $2.65 billion.

Bracken P. Darrell: This result allowed us to continue making progress against one of our biggest priorities reducing debt as we ended fiscal year 'twenty four with net debt of about $5 3 billion down approximately $540 million versus last year.

Bracken P. Darrell: The free cash flow beat was largely driven by lower working capital primarily inventory as we were able to bring those levels down more quickly than projected.

Bracken P. Darrell: Liquidity at the end of the year was approximately $2 65 billion.

Matthew H. Puckett: Now moving on to a review of the Q4 P&L. During the quarter, revenue was down 13%, including a little more than two points of impact from reset actions, and, right in line with our expectations, largely driven by the U.S. wholesale performance, which, as expected, weighed on results across our brand portfolio. This compares with Q3 revenue of minus 17%, which also included a similar impact from the Reset Act. Turning to the performance by region,

Bracken P. Darrell: Now moving onto a review of the Q4 P&L.

Bracken P. Darrell: During the quarter revenue was down 13%, including a little more than two points of impact from reset actions and right in line with our expectations largely driven by the U S wholesale performance, which as expected weighed on results across our brand portfolio.

Bracken P. Darrell: This compares with Q3 revenue of minus 17%, which also included a similar impact from recent actions.

Bracken P. Darrell: Turning to the performance by region relative to the Americas, Our international business remained more resilient down 4% for the quarter.

Matthew H. Puckett: Relative to the Americas, our international business remained more resilient, down 4% for the quarter. As the APAC region continued to grow, and as anticipated, the run rate in Europe improved relative to Q3. The Americas region was down 23% in the quarter, as anticipated, a similar trend to Q3. As a continued cautious posture from our wholesale partners and our actions to further reduce inventories in the channel, particularly in the U.S., wait heavily on results. The DTC channel, although delivering a better performance than wholesale, was down low double digits in the quarter, as given by Vance. The North Face Direct-to-Consumer was slightly positive.

Bracken P. Darrell: The APAC region continued to grow and as anticipated the run rate in Europe improved relative to Q3.

Bracken P. Darrell: The Americas region was down 23% in the quarter as anticipated.

Bracken P. Darrell: Similar trend to Q3 as a continued cautious posture from our wholesale partners and our actions to further reduce inventories in the channel, particularly in the U S quite heavily on our results.

Bracken P. Darrell: The DTC channel also delivering a better performance for wholesale was down low double digits in the quarter driven by vans, the north face direct to consumer was slightly positive.

Performance in the EMEA region sequentially improved to down 5% in the quarter driven by growth in the DTC channel across most brands, including growth in the north face vans and timberland led by our brick and mortar channel, which overall grew mid single digits in the region.

Matthew H. Puckett: Performance in the EMEA region sequentially improved to down 5% in the quarter, driven by growth in the D-to-C channel across most brands, including growth in the North Face, Vans, and Timberland, led by our brick-and-mortar channel, which overall grew mid-single digits in the region. While wholesale is still negative, there was a significant improvement in run rate relative to last quarter, partly reflecting the normalization of delivery timing, which distorted the year-on-year comparison in Q3.

Bracken P. Darrell: While wholesale is still negative there was a significant improvement in run rate relative to last quarter.

Reflecting the normalization of delivery timing, which which distorted the year on year comparison in Q3.

Bracken P. Darrell: Lastly, the APAC region was up 2% with all brands, we distributed in the market growing except for vans and dickies, reflecting their ongoing turnarounds.

Matthew H. Puckett: Lastly, the APAC region was up 2% with all brands we distribute in the market growing except for Vans and Dickies, reflecting their ongoing turnaround. Growth was led by continued strong momentum at the North Face and ongoing growth in Timberland. Importantly, direct-to-consumer for the region was up high single-digit. While Greater China remained strong, up 10%, declines in Southeast Asia and Korea pulled down the performance of the region overall.

Bracken P. Darrell: Growth was led by continued strong momentum at the north face and ongoing growth in timberland.

Bracken P. Darrell: Importantly, as well direct to consumer for the region was up high single digits.

Bracken P. Darrell: While greater China remained strong up 10% declines in southeast Asia, and Korea pulled down the performance of the region overall.

Bracken P. Darrell: Looking at the performance by brand the North face was down 5% in the quarter as expected.

Matthew H. Puckett: Looking at the performance by brand, the North Face was down 5% in the quarter, as expected. Starting with the positives, DTC was up 7% globally for the brand, reflecting positive growth across all three regions. And we continue to see outperformance in the APAC region growing 15%, driven by greater Chinese growth of almost 30%, and partly offset by the one-time impact of returns in the Australia and New Zealand market to shift our model from a distributor to a direct business. While the cold weather season had a slow start, Ottawa had a good quarter and was up mid-single digits for the year, as underlying sell-through across the business remained solid.

Bracken P. Darrell: Starting with the positives.

Bracken P. Darrell: DTC was up 7% globally for the brand reflecting positive growth across all three regions.

Bracken P. Darrell: And we continued to see outperformance in the APAC region growing 15% driven by greater China growth of almost 30% and partly offset by the onetime impact of returns in the Australia, and New Zealand market to shift our model from a distributor to a direct business.

Bracken P. Darrell: While the cold weather season had a slow start outerwear had a good quarter and overall was up mid single digits for the year as underlying sell through across the business remains solid.

Matthew H. Puckett: The global performance, however, was impacted by the larger wholesale pressure we outlined last quarter, which is primarily contained in the Americas and which will continue to weigh on results over the next couple of quarters. BAN's revenue declined 27% in the quarter, in line with our expectations, and reflecting the impact of the previously contemplated inventory reset actions that had a four-point negative impact on the top line, similar to Q3. While both DTC and Wholesale were down on a global basis, it's worth noting that DTC and Europe grew in the quarter, reflecting the brand's relatively stronger position in those markets and the benefits it has been deriving from the regional platform.

Bracken P. Darrell: Global performance, however was impacted by the larger wholesale pressure and we outlined last quarter, which is primarily contained to the Americas and which will continue to weigh on results over the next couple of quarters.

<unk> revenue declined 27% in the quarter in line with our expectations and reflecting the impact of the previously contemplated inventory reset actions net of four point negative impact on the top line similar to Q3.

Bracken P. Darrell: While both DTC and wholesale were down on a global basis, it's worth noting that DTC in Europe grew in the quarter, reflecting the brand's relatively stronger position in those markets and the benefits that had been deriving from the regional platform.

Bracken P. Darrell: Timberland was down 14%, including about a six point negative impact from reset actions in the U S wholesale marketplace with sequential improvement on last quarter, reflecting growth in both Europe and in Asia, where the brand continues to resonate and we're the go to market execution has been more consistent and effective.

Matthew H. Puckett: Timberlake was down 14%, including about a six-point negative impact from reset actions in the U.S. wholesale market, with sequential improvement over last quarter, reflecting growth in both Europe and in Asia, where the brand continues to resonate and where the go-to-market execution has been more consistent and effective. The issues largely rest with the business in the Americas, which continues to be challenged, and where the wholesale channel is significantly pressured because of reduced order books and ongoing soft sellout trends. Dickies was down 15% from similar drivers and regional trends in the last quarter as we continue to refocus the brand on our core workwear consumer and business.

Bracken P. Darrell: The issues largely rest with the business in the Americas, which continues to be challenged and where the wholesale channel is significantly pressured because of reduced order books and ongoing soft sell out trends.

Bracken P. Darrell: <unk> was down 15% on similar drivers in regional trends for last quarter as we continue to refocus the brand on our core workwear consumer and business Americas continued to see soft sell out trends across the marketplace and in APAC, we continue to reposition the business and adjust inventory levels with our partners.

Matthew H. Puckett: America's continued to see soft sellout trends across the marketplace, and in APAC, we continue to reposition the business and adjust inventory levels with our partners. Supreme delivered another strong quarter with sales up low double digits in Q4, reflecting a good start to the spring season and further validation of the grow wide strategy with a continued strong performance in Korea as well as the late-quarter store opening in Shanghai. Moving down the P&L, Adjusted Gross Margin declined 120 basis points in the quarter to 48.4%. But that's not the full story, nor the most important takeaway.

Bracken P. Darrell: The cream delivered another strong quarter with sales up low double low double digits in Q4, reflecting a good start to the spring season, and further validation of the grow wide strategy with the continued strong performance in Korea as well as the late quarter store opening in Shanghai.

Bracken P. Darrell: Moving down the P&L adjusted gross margin declined 120 basis points in the quarter to 48, 4%.

Bracken P. Darrell: But that's not the full story, nor the most important takeaway.

Matthew H. Puckett: The story really is that we were able to more quickly reduce inventories and drive higher free cash flow than anticipated and, as a result, saw a more significant near-term impact on gross margin than expected. To unpack the details explaining the basis point change versus last year, favorable channel and regional mixed benefits and lower product costs were more than offset by a number of areas, including negative foreign currency transaction impact, and several factors directly connected to the intentional reset act.

Bracken P. Darrell: The story really is that we were able to more quickly reduce inventory and drive higher free cash flow than anticipated and as a result saw more significant near term impact on gross margin than expected.

Bracken P. Darrell: So impact of details explaining the basis point change versus last year favor.

Bracken P. Darrell: Favorable channel and regional mix benefits and lower product costs were more than offset by a number of areas, including negative foreign currency transaction impact.

Bracken P. Darrell: Several factors directly connected to the intention of recent actions, namely a continued elevated level of promotions and clearance activity as part of our effort to reduce inventory levels and reset the marketplace to a healthier level and mix as well as higher inventory reserves, most notably a dickies.

Matthew H. Puckett: Namely, a continued elevated level of promotion and clearance activity as part of our effort to reduce inventory levels and reset the marketplace to a healthier level and mix, as well as higher inventory reserves. Importantly, excluding impacts from reset actions and the associated inventory reserves, which were more than 200 basis points, gross margin would have been up about 100 basis points versus last year, inclusive of the negative foreign currency impact.

Bracken P. Darrell: Importantly, excluding impacts from recent actions and the associated inventory reserves, which were more than 200 basis points gross margin would have been up about 100 basis points versus last year inclusive of the negative foreign currency impact.

Matthew H. Puckett: SG&A was down slightly, reflecting lower volume-related spending and incremental savings from the re-invent program, which will accelerate as we move into Fiscal 25, although partly offset by incentive compensation timing versus last year and modest spend increases in our key investment areas, along with comping prior year benefits in SG&A, primarily associated with gains on assets. As a result of the lower revenue, SG&AD leveraged in the quarter by about 650 basis points. Adjusted operating margin decreased 770 basis points to a negative 2.1 percent, and adjusted earnings per share was minus 32 cents.

Bracken P. Darrell: SG&A was down slightly reflecting lower volume related spending and incremental savings from the reinvent program, which will accelerate as we move into fiscal 'twenty five.

Bracken P. Darrell: Partly offset by incentive compensation timing versus last year and modest spend increases in our key investment areas along with Comping prior year benefits in SG&A, primarily associated with gains on asset sales.

Bracken P. Darrell: As a result of the lower revenue SG&A deleveraged in the quarter by about 650 basis points.

Bracken P. Darrell: Adjusted operating margin decreased 770 basis points to a negative two 1% and adjusted earnings per share was minus 32.

Speaker Change: Now I'd like to provide a brief update on the progress we've made on cost savings connected to reinvent where I'll build on some of the updates you heard from Bracken earlier in the call.

Matthew H. Puckett: Now I'd like to provide a brief update on the progress we've made on cost savings connected to reInvent. Here, I'll build on some of the updates you heard from Bracken earlier in the call. We delivered about $80 million in gross savings this year versus our target, including about $40 million in fiscal Q4, primarily driven by headcount reductions and supply chain savings. We remain on track to deliver at least $300 million in annualized savings, which we expect to be fully in place on a forward-run rate basis by the middle of fiscal year 25. In Q4, we booked an additional $55 million in charges, of which $16 million were non-cash. Including the charges recorded in Q3, the full year total was about $105 million, of which $35 million were non-cash.

Speaker Change: We delivered about $80 million in gross savings this year versus our target, including about $40 million in fiscal Q4, primarily driven by head count reductions and supply chain savings.

Speaker Change: We remain on track to deliver at least $300 million in annualized savings, which we expect to be fully in place on a forward run rate basis by the middle of fiscal year 'twenty five.

Speaker Change: In Q4, we booked an additional $55 million in charges of which $16 million were noncash, including the charges recorded in Q3. The full year total was about $105 million of which $35 million were noncash.

Matthew H. Puckett: We now expect the total charges associated with re-invent to be approximately $130 to $150 million. As previously stated, we intend to reinvest a portion of the savings oriented towards our biggest brands and opportunities, and specifically focused on the areas of product design and innovation and brand building. To date, the reinvestment has been limited, as expected, and we anticipate this will accelerate as we move into fiscal 25 and beyond. If I sum up fiscal 24, it can be characterized by a significant amount of transformative actions that we've proactively implemented to adjust the operating model and rationalize and optimize our call structure.

Speaker Change: Now expect the total charges associated with reinvent to be approximately $130 million to $150 million.

Speaker Change: As previously stated we intend to reinvest a portion of the savings oriented towards our biggest brands and opportunities and specifically focused on the areas of product design and innovation and brand building to date. The reinvestment has been limited as expected and we anticipate this will accelerate as we move into fiscal 'twenty five and beyond.

Speaker Change: If I sum up fiscal 'twenty four it can be characterized by a significant amount of transformative actions that we've proactively implemented to adjust the operating model and rationalize and optimize our cost structure.

Matthew H. Puckett: Reset the marketplace and begin improving the health and the trajectory of the business. While we're not issuing P&L guidance now, I wanted to provide some guardrails specific to Q1 and context relative to our cash flow outlook for fiscal 25. First, revenue will remain challenged in the near term, particularly in Q1.

Speaker Change: He set the marketplace and began improving the health and the trajectory of the business.

Speaker Change: While we're not issuing P&L guidance now I wanted to provide some guardrails specific to Q1 and context relative to our cash flow outlook for fiscal 'twenty five.

Speaker Change: First revenue remained challenged in the near term, particularly in Q1, we expect the results to be comparable to Q4, when excluding the impact of reset actions that occurred during that timeframe.

Matthew H. Puckett: We expect the results to be comparable to Q4 when excluding the impact of reset actions that occurred during that time frame. Specific to gross margins, which across much of the year should benefit from more fundamental tailwinds than headwinds, in Q1, we expect year-over-year margin erosion as we work through the residual excess inventory resulting from the cleanup actions we've taken over the last two quarters. This will largely be contained to sell out in the clearance channels, including our own output.

Speaker Change: Specific to gross margins, which across much of the year should benefit from more fundamental tailwind and headwinds in Q1, we expect year over year margin erosion as we work through the residual excess inventory, resulting from the cleanup actions we've taken over the last two quarters.

Speaker Change: This will largely be contained to sellout in the clearance channels, including our own outlets.

Speaker Change: We expect to generate approximately $600 million in cash available financing activities from free cash flow plus the proceeds from noncore asset sales.

Matthew H. Puckett: We expect to generate approximately $600 million in cash available for financing activities from pre-cash flow plus the proceeds from non-core asset sales. It's worth explaining that the lower level of cash generated, as compared to Fiscal 24, is a result of lower working capital benefits. In particular, when considering that last year included over $500 million benefit from inventory reduction, we expect to end the year with liquidity of at least $2 billion, which contemplates the payment of the $1 billion term loan due in December.

Speaker Change: It's worth explaining that the lower level of cash generated as compared to fiscal 'twenty four as a result of less working capital benefit in.

Speaker Change: In particular when considering this last year included over 500 million benefit from inventory reductions.

Speaker Change: We expect to end the year with liquidity of at least $2 billion, which contemplates the payment of the $1 billion term loan due in December.

Speaker Change: And this is my last earnings call at VF I wanted to take a minute to close with a thank you.

Matthew H. Puckett: As this was my last earnings call with VF, I wanted to take a minute to close with a thank you. I've truly enjoyed the time I spent getting to know and work with all of you over the years, and in particular the last three in the role of CFO. And I can tell you that I've learned a great deal from our interaction. While the business is not yet where I know it has the potential to be and will get to, I'm confident that the priorities we've set and the actions we've implemented, particularly in the last few quarters since Bracken took the helm as CEO, will position this great company for a very bright future. And I look forward to watching the continued evolution of VF. With that, I'll hand it over to the operator, and we'll take your questions.

Speaker Change: I've truly enjoyed the time spent getting to know and work with all of you over the years and in particular over the last three and the role of CFO.

Speaker Change: And I can tell you that ive learned a great deal from our interactions.

Speaker Change: While the business is not yet where I know it has the potential to be and we will get to I'm confident that the priorities. We have set and the actions we've implemented particularly in the last few quarters. Since Bracken has taken the helm as CEO will position. This great company for a very bright future and I look forward to watching the continued evolution of the year.

Speaker Change: With that I'll hand, it over to the operator, and we'll take your questions.

Speaker Change: Thank you, we'll now be conducting a question answer session. As a reminder, we ask you. Please ask one question and return to the queue, if you'd like to be placed in the question queue. Please press star one on your telephone keypad.

Operator: Thank you. We'll now be conducting a question and answer session. As a reminder, we ask you to please ask one question, then return to the queue. If you'd like to be placed in the question queue, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. One moment, please, while we poll for questions. Our first question is coming from Michael Bonetti from Evercore ISI. Your line is now live.

Speaker Change: Confirmation tone will indicate your line is in the question queue. One moment. Please while we poll for questions. Our first question is coming from Michael Binetti from Evercore ISI. Your line is that a lot.

Michael Charles Binetti: Hey guys, thanks for taking our questions here. Let me ask, you know, Bracken, you spoke to Vans about Europe and D2C turning positive. Can you just help us maybe connect the dots in that market a little bit more? I know you like that as a leading indicator.

Michael Binetti: Hey, guys. Thanks for taking my questions here.

Michael Binetti: Let me ask you a bracket you spoke to vans Europe DTC turning positive can you just help us maybe connect the dots in that market a little bit more.

Speaker Change: I know you like that as a leading indicator.

Michael Charles Binetti: You know, you said, you know, this is happening with the inventory cleaned up, the D2C turned positive. Is it safe to say that inventories in the wholesale channel there also had to be clean for that to happen in direct to consumer? And if so, are there any signs of improvements in the forward season order books from wholesale that we can look to, or thoughts that we can, anything we can maybe think about as far as order books stabilizing similar to D2C as the, you know, I'm trying, I guess I'm trying to think, are there reasons to think the rebuild there will be more uneven between the channels, or is D2C, do you see some evidence that D2C could be a leading indicator on wholesale?

Speaker Change: He said yes.

Speaker Change: This is happening with the inventory cleaned out the D to C turned positive is it safe to say that inventories in the wholesale channel. There also had to be clean for that to happen and direct to consumer and if so are there any signs of improvements in the forward season order books from wholesale that we can look to our thoughts that we can.

Speaker Change: Anything we can maybe think about as far as order books stabilizing similar to D to C.

Speaker Change: I'm trying to I guess I'm trying to think are there reasons to think the rebuild there'll be more uneven between the channels or is do you see or do you see some evidence of DTC can be a leading indicator on wholesale.

Bracken P. Darrell: Okay, yeah, just to start, thank you, Michael, and great to hear from you. Yeah, I do think, as I mentioned on the last call, and I mentioned it in the opening today, I do think that turnarounds start in one channel or one part of the world, and then they start to spread, not virally, but systematically, and I think that's what we're seeing now in Europe. I'm gonna let Martino answer the specific question about Europe and DTC versus wholesale, but I think you can generally say that yeah, I think we're seeing, we're gonna see wholesale come pretty quickly there, but DTC's already positive.

Speaker Change: Okay just to start thank you, Michael and great to hear from you.

Speaker Change: I do think as I think I've mentioned in the last call.

Speaker Change: And the opening today I do think that turnaround start in one channel or one part of the World and then they started to spread.

Speaker Change: Not directly but systematically and I think thats, where thats what were seeing now in Europe I'm going to let.

Speaker Change: Martino answer the specific question about Europe, and DTC versus wholesale, but I think you can generally say that.

Speaker Change: I think we're saying we're going to see wholesale come pretty quickly there, but the PTC is already positive.

Martino Scabbia Guerrini: Thank you, Bracken. Hi Michael.

Speaker Change: Yeah. Thank you Bracken, Hi, Michaels nurse's neck.

Speaker Change: I think.

Speaker Change: You can see.

Martino Scabbia Guerrini: Nice to hear from you. I think we can see, you know, the direct-to-consumer in Europe has definitely improved, and it's simply driven by focus and experience, you know, a bit of newness starting to get traction, and definitely a better assortment mix that allows a much stronger conversion from consumers. So that was a little bit of set traffic that may remain challenging, but we really see an improved engagement with the brand.

Speaker Change: Direct to consumer doesn't improve.

Speaker Change: Simply driven by focus and experience a bit of newness and are starting to get traction and definitely a better assortment mix that allow the much stronger conversion.

Speaker Change: Phone consumers, so that was a little bit offset traffic remained challenging but we did see an improved engagement with the brand at the same time, we have invested in <unk> in the marketplace as we discussed and definitely we see certain trends improving and we see a better opportunity to win with our partners that are really interested in the past.

Martino Scabbia Guerrini: At the same time, we have better inventors in the marketplace, as we discussed, and definitely, we see search trends improving, and we see a better opportunity to win with our partners that are really, you know, interested in the balanced brand. They love the brand. They want to engage with the brand, and they want to win again together with us. So we've been, I think, creating the conditions to now take advantage of that opportunity. Yeah, no, thank you for that. I think, you know, it is a...

They love the brand they want to engage with the brands and what they want to win against together with US. So we've been I think creating the conditions to now worked against.

Bracken P. Darrell: Yeah, and if I could just add, I think, you know, it is a good leading indicator because we were never as overloaded on the channels in Europe as we were in the Americas, which meant the cleanup in the Americas didn't need to happen in Europe, same way. Okay, thank you. Thank you, Michael.

Speaker Change: Yeah, and if I could just add I think it is a good leading indicator because we were never as is overloaded and the channels in Europe as we were in the Americas, which moved the cleanup in Americas didn't need to happen in Europe segue.

Speaker Change: Okay. Thank you.

Michael Binetti: Thank you Michael.

Laurent Andre Vasilescu: Thank you. The next question is coming from Laurent Vasilescu from BNP Paribas. Your line is now live.

Speaker Change: Thank you next question is coming from the <unk> from BNP Paribas. Your line is now live.

Laurent Andre Vasilescu: Oh, good afternoon. Thank you very much for taking my question.

Speaker Change: Thank you very much for taking my question Bracken.

Speaker Change: Ask about the north face I know Nicole is not on the call.

Speaker Change: Tonight, but.

Speaker Change: In the press release it says.

Speaker Change: Wholesale weakness in the U S can you maybe just.

Bracken P. Darrell: Bracken, I'd like to ask about the North Face. I know Nicole's not on the call tonight, but in the press release, it says ongoing wholesale weakness in the U.S. Can you maybe just give a little bit of a framework around that? How do we think about that? I know you're not guided by brands or by revenues for the company, but how do we think about North Face overall for this coming year?

Speaker Change: Give a little bit of a framework around there.

Speaker Change: How do we think about I know, you're not guiding by brand or by revenues for the company, but how do we think about north face.

Speaker Change: Overall for the for this coming year.

Bracken P. Darrell: Yeah, you know, the overall, the ongoing wholesale weakness is especially true in the US and in the kind of winter apparel products, so I think that's very relevant. I'm going to start to let Martino take a lot of these regional questions, and I'll vibrate.

Speaker Change: Yes.

Overall, the ongoing wholesale weakness he is especially true in.

Speaker Change: In the U S and in the kind of a winter apparel products. So I think thats very relevant.

Speaker Change: I'm going to start to lift.

Speaker Change: I'll take a lot of these regional questions by brands. So I'll, let you take this one.

Martino Scabbia Guerrini: Yeah, I think one comment is about, honestly, our performance overall in the Americas region, and specifically in the wholesale channel, which I think has been one of our key challenges. You probably know the numbers that we lost there.

Speaker Change: Yes, I think one comment about honestly our performance overall in the Americas region and specifically in the wholesale channel I think has been one of our key challenges.

Speaker Change: You probably know the numbers that we lost there but also this is our biggest incremental facilities and TNF north face can definitely lead into that.

Martino Scabbia Guerrini: But also, this is our biggest information opportunity, and TNF and North Face can definitely lead into that. The brand specifically has the opportunity now to double down on the stronger partnership that we really focused on to reset and actually strategically frame for the future in the Americas wholesale market. So, I would say it's a bit of a common opportunity or issue so far in the Americas region across brands and the opportunity for the North Face to really leverage their strength to have a more relevant and more diversified and a more segmented play in the Americas distribution, including high tiers.

Speaker Change: The brands specifically is now the consensus to double down on some of the partnership.

Speaker Change: We really focus to reset and actually strategically explained for the future in the Medicare the wholesale market. So I would say is a bit of a common opportunity our issues. So far in the makers, reaching across brands and the opportunity for the north face to really leverage into this strength to have a more relevant and more diversified than in most segments at play.

Speaker Change: Into the American distribution included also highest tiers of distribution.

Speaker Change: Very good thank you so much.

Speaker Change: Sorry about getting brand certainly not by brand by by region of the world but.

Speaker Change: And continue to be very bullish about the aerospace I think it's a great run of great position, we have a lot of.

Speaker Change: While some products out in coming and we're going to continue to invest.

Speaker Change: At the same kind of rate in both product and brand building.

Laurent Andre Vasilescu: Very helpful. And then, Matt, if I heard correctly, I think you said you expect to pay down the billion-dollar tranche in December. Should we assume refinancing of the 750 that comes due in April? And if so, how should we think about interest expense for fiscal year 25? I don't know if you can kind of give us some guardrails for the audience on that.

Speaker Change: Very helpful and then my.

Speaker Change: If I heard correctly I think you said you expect youre going to pay down the $1 billion tranche.

Speaker Change: In December.

Speaker Change: Should we assume refinancing of 750 that comes due in April and if so how should we think about <unk>.

Speaker Change: Interest expense for for fiscal year 'twenty five I don't know if you can kind of give us some guardrails for the audience on that front.

Speaker Change: Yes, Yes, you want me to take that one Brian.

Matthew H. Puckett: Yeah, you want me to take that one, Bracken? Yeah, why don't you go ahead? Go ahead and have that.

Matthew H. Puckett: Yeah, so, what I said in the prepared remarks there was that we'll end the year with more than $2 billion in liquidity, which contemplates the pay-down of the billion in December, right? So, that's going to come from, we've got a little bit of excess cash on the balance sheet coming into the year, we're going to generate quite a bit of cash, and we kind of talked about what that was. And then quite honestly, probably a little bit of an increase in short-term borrowings that we would kind of fund and pay back pretty quickly with cash from the business.

Brian: Yes, so yes, what I said in the prepared remarks, there was that.

Speaker Change: We can then we will end the year with more than 2 billion liquidity, which contemplates the paydown of the $1 billion in December right. So that's going to come from we got a little bit excess cash on the balance sheet coming into the year, we're going to generate quite a bit of cash we kind of talked about what that is and then and then quite honestly, probably a little bit a little bit of an increase in short term borrowings that we would kind of.

Speaker Change: Fund with.

Speaker Change: Payback pretty quickly just from cash from the business. So that's the assumptions there and I think I think you are right. I mean, you start to do the math it gets pretty difficult too.

Matthew H. Puckett: So, those are the assumptions there, and I think you're right. I mean, when you start to do the math, it gets pretty difficult to see the 750 not needing to be refinanced, barring other actions, which obviously we're aggressively looking at some other things, right? We talked about the strategic portfolio review is now complete, and obviously, you know, ongoing work there associated with that.

Speaker Change: See the 750, not needing to be refinanced barring other actions, which obviously we're aggressively looking at some other things right and we talked about we talked about the strategic portfolio review is now complete and and obviously ongoing work there associated with that so.

Bracken P. Darrell: So, but I think you got the math right. The other thing on interest, it'll be modestly lower year over year, but not dramatically. And if I could just add, and Matt said it, but we don't have any intention to refinance any of that.

Speaker Change: But I think you got the math right gathering on interest it'll be modestly lower.

Speaker Change: Year over year, but not but not dramatically so.

Speaker Change: And if I can just add.

Matthew H. Puckett: And Matt said, it but we don't have any intention to refinance any of us.

Okay wonderful. Thank you very much tracking now thank.

Laurent Andre Vasilescu: Wonderful. Thank you very much, Bracken and Matt. Thank you, Laurent. Thank you. The next question today is coming from Simeon Siegel from BMO Capital Markets. Your line is now live. Thanks. Hey, good afternoon, everyone. And Matt, just want to wish you best of luck in the next chapter. Bracken, just to follow up on the last one.

Laura: Thank you Laura.

Thank you. Your next question today is coming from Simeon Siegel from BMO capital markets. Your line is now live.

Simeon Avram Siegel: Thank you. The next question today is coming from Simeon Siegel from BMO Capital Markets. Your line is now live.

Simeon Avram Siegel: Thanks, Hey, good afternoon, everyone not just wanted again wish you best of luck in the next chapter.

Speaker Change: Brian just to follow up on the last one nice thing about the positivity around north face just maybe higher level. How do you think about the north face revenue decline how do they differ from bands like any thoughts on just diagnosing the depth of any potential declines there would probably be helpful.

Speaker Change: And then I.

Speaker Change: Sorry, if I missed it did you gave north faces wholesale sell in versus sell through just trying to think through what the challenging U S wholesale north face versus its growth tells you about the brand and how people are seeing it thanks guys.

Simeon Avram Siegel: I'm going to take the first one. I'm going to let Matt handle the second one.

Speaker Change: I'm going to take first I'm going to let Matt handle the second one, but I'd say overall I feel very good about the north sea. So I think we're quite a different position from bands.

Bracken P. Darrell: But yeah, I'd say overall, I feel very good about the North Face. I think we're in quite a different position from Vance. You know, the growth of the North Face in general is not concentrated in a few styles. It's really broad-based, and we've got a very strong portfolio. We have strong dynamics across the world in the North Face. We're very strong in China. But, you know, I think, in general, we have a lot of share gain opportunities over time.

Matthew H. Puckett: The growth in aerospace in general is not concentrated in a few styles, it's really broad based and we've got a very strong portfolio, we have strong diner.

Matthew H. Puckett: Dynamics across the world and the North face are very strong in China, but I think in general we're in a we have a lot of share gain opportunity overtime.

Bracken P. Darrell: The underlying sell-out continues to be strong, you know, 7% this quarter. It's been strong and strong around the world, by the way. So I think we're in a really different position. We had that question last quarter, and we said, you know, you'll see it. You'll see BTC continue to be strong, and it has been. Matt, do you want to answer that question about sell-out versus sell-through in the North Face?

Matthew H. Puckett: The underlying sellout continues to be strong 7%. This quarter. It's been strong it is strong around the world by the way. So I think we're in a really different positioning.

Last quarter, and we said Youll see Youll see DTC continued to be strong. It has been that you want to answer that question about sell out versus sell through in the north face.

Matthew H. Puckett: Yeah, I think what I would say is fill-outs generally have been pretty good, right? You know, I said in my comments that outerwear overall across the year was good and growing, and that was across channels.

Matthew H. Puckett: Yes.

Speaker Change: What I would say is still has generally been pretty good right.

Speaker Change: I said in my comments that outerwear overall across the year was good and growing and that was across channels.

Matthew H. Puckett: You know, another factor here is we've talked a lot about reset. But there are really no real reset actions happening in the North Face because inventories at wholesale are in a pretty good place and we sold in fewer this year, right? The fall order books were down. We said that from the very beginning of the year some of that was the continued residual kind of challenges we had from disappointing the marketplace a couple seasons ago, right?

Speaker Change: Another factor here is we've talked a lot about reset theres really no real reset actions happening in the north face because inventories at wholesale or in a pretty good place and we sold and less this year right. The fall order books were Dan we said that from the very beginning of the year. Some of that is the continued residual kind of challenges we had from disappointing and the marketplace. A couple of seasons ago, right and so we need to build that credibility.

Matthew H. Puckett: And so we need to build back credibility in terms of on-time deliveries and sell-through, etc. That is happening, and obviously, as we look forward into future seasons, we'll start to see the benefit of some of those. If I could just add one more thing.

Speaker Change: In terms of on time deliveries in and sell through et cetera that is happening and obviously as we look forward into future seasons will start to see the benefit of some of those things.

Bracken P. Darrell: If I could just add one more thing, I mean, I also, it's just hard not to, it's hard not to bring up the Americas operating model of the past in the context of any of our brands. And that's certainly true for the North Face. We underperformed in America in general, you know, for several years, many years.

Speaker Change: If I could just add one more thing.

Speaker Change: Yes.

Speaker Change: It's just hard not to it's hard not to bring up the Americas operating model in the past in the context of any of our brands and that's certainly true in the North Texas that we underperformed in the Americas in general for several years. Many years. So as we bring that operating model and I'm really bullish on that too I think over time, it's really going to take hold and resume.

Bracken P. Darrell: So as we bring that operating model in, I'm really bullish on that too. I think over time it's really going to take hold, and we're going to see a pretty dramatic improvement in the North Face and the Americas. Don't expect that this quarter or next quarter, but it's going to come.

Pretty dramatic improvement in the northeast and the Americas don't expect it this quarter next quarter, but it's going to go.

Speaker Change: That's great. Thanks, a lot guys best of luck.

Speaker Change: Thanks, Amit.

Simeon Avram Siegel: That's great. Thanks a lot, guys. Best of luck to the rest of you. Thanks, Simeon. Thank you. The next question is coming from Brooke Roach from Goldman Sachs. Your line is now live. Good afternoon, and thank you for taking our call.

Brooke Siler Roach: Thank you, Brooke. And it's great to hear from you.

Speaker Change: Thank you next question is coming from Brook Road from Goldman Sachs. Your line is now live.

Speaker Change: Good afternoon, and thank you for taking our question I wanted to follow up on the inventory and marketplace cleanup actions that you've taken including SKU count reductions in both DTC and wholesale will that initiative be complete at the end of the first quarter and as a result, how are you thinking about the puts and takes to gross margin.

Brooke Siler Roach: Thanks, Simeon. Thank you. The next question is coming from Brooke Roach from Goldman Sachs. Your line is now live.

Speaker Change: <unk> promotion pricing and mix.

Speaker Change: Relative to other items that might be driving your gross margin for the year. Thank you.

Speaker Change: Thank you Brook, and Richard I'm going to take a high level.

Bracken P. Darrell: I'm going to make a high-level comment, but then I'm going to hand it off to Matt. Yes, generally speaking, those actions are going to be complete by the end of the first quarter, but not the... We may or may not be fully complete on selling through the rest of that inventory that we brought back, which is what Matt referenced in his opening remarks. Matt, do you want to finish that? Yeah.

Speaker Change: <unk> had an ultimate yes, generally speaking those actions are going to be complete by the first quarter, but not the we may or may not be fully complete on selling through the rest of that inventory that we brought back which is what.

Speaker Change: Which is what Matt referenced in his opening remarks, Matt you want to finish that.

Matthew H. Puckett: Yeah, for sure. So I'll just be, I'll be pretty definitive.

Yeah for sure so I'll just be I'll be pretty definitive.

Matthew H. Puckett: We are largely done broke with the actual reset actions, meaning getting the marketplace. The full price marketplace clean right. So getting inventory out of the system, obviously selling through and clearing through excesses.

Matthew H. Puckett: Through the season as well so that's been a pretty good place we will have a residual impact.

Matthew H. Puckett: At a minimum through the first quarter fairly meaningfully as we as we sell through some of that inventory that we pulled out of the full price channels right, we're going to sell through that and clearance channels largely in our own outlets right and so that's that's kind of the story there, but looking beyond that and do you think about Canada.

Matthew H. Puckett: We're largely done, Brooke, with the actual, you know, reset actions, meaning getting the marketplace, the full price marketplace, clean, right? So, you know, getting inventory out of the system, obviously selling through and clearing through excesses, you know, through the season as well. So that's in a pretty good place. We will have a residual impact, you know, at a minimum through the first quarter, and it will be fairly meaningful as we sell through some of that inventory that we pulled out of the full price channels, right? We're going to sell through that, you know, in clearance channels, largely in our own outlets, right? And so that's, that's kind of the story there.

Matthew H. Puckett: The puts and takes of margin.

Matthew H. Puckett: In the fiscal 'twenty, five and kind of through the year.

Matthew H. Puckett: There is there are several things to consider I mean mix mix benefits will continue there'll be there'll be less than they were in fiscal 'twenty four would be would be the expectation is wholesale in the Americas generally improves a bit across time.

Matthew H. Puckett: But looking beyond that, and you think about kind of the puts and takes of margin in fiscal 25 and kind of through the year, there's, you know, there's several things to consider. I mean, mixed benefits will continue. There'll be less than they were in fiscal 24, would be the expectation as wholesale in the Americas, you know, generally improves a bit across time. Product costs are not going to be an issue.

Matthew H. Puckett: Costs are not going to be an issue.

Matthew H. Puckett: If anything they could be slightly down on a full year basis in fiscal 'twenty five.

Foreign currency, which has been a meaningful headwind will be less so it'll still be a bit of a headwind, but not to the degree that it has been and then of course, you've got the impact of the actions themselves, we're going to be cleaner from an inventory standpoint marketplace appears to be cleaner hard to hard to know exactly what the marketplace will do and what consumers will do across the year, but certainly we're coming into the year.

Matthew H. Puckett: Cleaner. So those are those are the key things I think to pay attention to.

Kevin: Great. Thank you if I could just ask one last Kevin I think the way to think about it as this chapter is massive this chapter of reset resetting the marketplace for bands is largely done if we've just got the residual effects of selling through what we brought back through our own outlets.

Speaker Change: Thank you next question is coming from Matthew Boss from Jpmorgan. Your line is now live.

Matthew H. Puckett: If anything, they could be slightly down on a full-year basis in fiscal 25. Foreign currency, which has been a meaningful headwind, will be less so. It'll still be a bit of a headwind, but not to the degree that it has been. And then, of course, you've got the impact of the actions themselves.

Matthew Robert Boss: Great. Thanks, Bracken I wanted to pick up maybe where you just left off so on vans.

Matthew Robert Boss: Actions do remain as part of the reset phase or where do you see us today versus the potential bottom advance how do you feel about inventory on hand in and just what's the timeline to scale some of the new product innovation that you cited in your remarks.

Speaker Change: I am really and about the new product innovation is happening.

Matthew H. Puckett: We're going to be cleaner from an inventory standpoint. The marketplace appears to be cleaner. Hard to, hard to know exactly what the marketplace will do and what consumers will do across the year, but certainly we're coming into the year cleaner. So those are, those are the key things I think to pay attention to. Great, thank you.

Speaker Change: Going back to my opening remarks, we launched the new schools.

Speaker Change: Early in my tenure at the company.

Speaker Change: Through really strong marketing and a great product. It's now the number two styles I think shows that we can launch a new style and turn it into a strong franchise almost out of the gate. We just recently the recently launched <unk>, which is the best case shoes over May I believe certainly our best ever and it's done very very well out of the gate.

Speaker Change: These products, it's really focused on skaters, let's stay tuned because we're going to have news on that so everybody soon.

Speaker Change: So I feel good about the steps, we're taking but there's so much more ahead of us so much more we can do.

Speaker Change: Do I feel like we're at the bottom I feel like we're either at the bottom are super close.

Speaker Change: I really do believe we're going to see the turn ahead through the tunnel.

Speaker Change: I would like us to predict a quarter for you, but I can see a company I love the fact that we.

Speaker Change: <unk>.

Speaker Change: DTC with positive in Europe, this quarter Thats, a great sign.

Speaker Change: Google search trends.

Speaker Change: Much better now than they were less robust versus last 12 months again things can wobble when youre looking at external data, but that feels good. So I think there are some real green shoots here.

Speaker Change: Great and then maybe just a follow up across the organization.

Speaker Change: What holds currently remain in terms of different leadership position in cell to cell.

Bracken P. Darrell: If I could just add one last comment. I think the way to think about it is this chapter, as Matt said, this chapter on reset, resetting the marketplace for vans is largely done if we just get the residual effects of selling through what we brought back through our own outlets. Thank you. Next question is coming from Matthew Boss from J.P. Morgan. Your line is online. Great, thanks.

Speaker Change: I think we're we talked about my leadership, assuming the opening and I'm Super excited about that.

Speaker Change: I have to say.

I'm really proud and excited that we've been able to attract somebody like brand hybrid came from Salesforce <unk>.

Speaker Change: Companies 25 times larger than ours.

Speaker Change: As a unicorn.

Speaker Change: Such a strong background in.

Speaker Change: In the retail industry that preceded this time.

Speaker Change: At Salesforce and then we've attracted Avishai <unk>, who came from Pacific Crush me I'm looking at it we came from BCG, but stood tall Lulu lemon and really have an extremely strong background. In this industry is primary focus was the apparel and footwear industry with BCG for seven or eight years. So.

I could go on and on so I'm really excited about the people. We brought in here. We've got several jobs that we're feeling right now so the Americas President role for example will be an internal promotion and we're really excited about him and he is going in there we announced today that we will have new vans frozen so.

Speaker Change: You are never completely finished and it comes to people because theres always.

Speaker Change: Some people come in units going out, but I feel really good about where we are.

Speaker Change: Great Best of luck.

Speaker Change: Thank you.

Speaker Change: Thank you next question is coming from Dana Telsey from Telsey Advisory Group. Your line is now live.

Matthew Robert Boss: Thank you. The next question is coming from Matthew Boss from J.P. Morgan. Your line is now live. Great, thanks. Bracken, I wanted to pick up maybe where you just left off.

Bracken P. Darrell: I'm really excited about the new product innovation that's happening. Going back to my opening remarks, we launched a new school very early in my tenure at the company, and through really strong marketing and a great product, it's now the number two style, which I think shows that we can launch a new style and turn it into a strong franchise almost out of the gate. We just recently launched AVE 2.0, which is the best skate shoe that's ever been made, I believe.

Bracken P. Darrell: It's certainly our best skate shoe ever, and it's done very, very well out of the gate. It's a niche product that's really focused on skaters, but stay tuned, because we're going to have news on that for everybody soon.

Bracken P. Darrell: I feel good about the steps we're taking, but there's so much more ahead of us and so much more we can do. You asked, do I feel like we're at the bottom? I feel like we're either at the bottom or super close. I really do believe we're going to see, I can see the turn ahead, you know, through the tunnel. I'm not going to sit here and predict a quarter for you, but I can see it coming.

Dana Lauren Telsey: Hi, good afternoon back and as you think about the portfolio restructuring and how I think as you mentioned turning over nothing sacred cows. So to speak where are you in that process. What does that look like and when do you think we'll have an update on on any particular changes. Thank you.

Speaker Change: Yes. Thanks for the question I was hoping I'd get this one.

Bracken P. Darrell: I love the fact that we're... And the DTC went positive in Europe this quarter. That's a great sign. Google search trends are much better now than they were in the last three months versus the last 12 months. Again, you know, things can wobble when you're looking at external data, but that feels good.

Speaker Change: First of all I just have to say I feel so lucky that we're sitting here with such a relatively rich.

Bracken P. Darrell: So I think there are some real green shoots here. Great. And then maybe just to follow up, across the organization, what holes currently remain in terms of different leadership positions still to fill? You know, I think we're, you know, we talked about my leadership team in the opening, and I'm super excited about that. You know, I have to say I'm really proud and excited that we've been able to attract, you know, somebody like Brent Heider who came from Salesforce, he was a CHRO there, a company 25 times larger than ours. He's an elephant; he's a unicorn.

Bracken P. Darrell: He has such a strong background in the retail industry that preceded his time at Salesforce. And then we've attracted Abishek Dalmia, who came from, who's sitting across from me, I'm looking at him, who came from BCG but spent time at Lululemon and really has an extremely strong background in this industry. His primary focus was the apparel and footwear industry at BCG for seven or eight years.

Bracken P. Darrell: So, you know, and, and I could go on and on. So I'm really excited about the people we've brought in here. We've got, there's, there are several jobs that we're filling right now. So the America's President role, for example, will be an internal promotion, and we're really excited about him, and he's going in there. We announced today that we'll have new Vance presidents coming in. So, you know, you're never completely finished when it comes to people because there's always, you know, some people coming in and some people going out, but I feel really good about where we are.

Dana Lauren Telsey: Thank you. The next question is coming from Dana Telsey from Telsey Advisory Group. Your line is now live.

Speaker Change: Assortment of brands to deal with which gives us great optionality.

Speaker Change: The portfolio review is complete and so we're active.

Dana Lauren Telsey: Hi, good afternoon. Bracken, as you think about the portfolio restructuring and how, I think, as you mentioned, turning over nothing's a sacred cow, so to speak, where are you in that process? What does it look like? And when do you think we'll have an update on any particular changes? Thank you.

Speaker Change: We made a decision not to share what we're asking a lot of what we might be doing publicly but you can you can believe completely but we are active.

Speaker Change: And we have optionality there so we have multiple directions to go.

Speaker Change: I don't I can't give you a timeframe when will be when youll see those actions come out, but we will obviously, we're going to announce them when they do but I feel very good about where we are and very good about the review.

Speaker Change: Thank you and just following up on that when you think about the channels of distribution wholesale digital and physical.

Physical store base in.

Speaker Change: And did your line your physical store base.

Are you seeing there and if the store base can stay at the same levels.

Speaker Change: What's your view on the capital allocation to it.

Bracken P. Darrell: Yeah, thanks for the question. I was hoping I'd get this one.

Speaker Change: First of all they are all three supercritical and I would not prioritize one over the other they each play a different role.

Speaker Change: Think the mistakes that could be made and probably hasnt made in our industry is to swing the pendulum in one direction or another I think.

Speaker Change: <unk>.

Speaker Change: You don't know if youre, winning through northern wholesale because you might just be winning in a private room, you and if you're if you're only in wholesale youre not taking advantage of an amazing brand strength. We have we're lucky because we have a very balanced distribution model between.

Bracken P. Darrell: First of all, I just have to say I feel so lucky that we're sitting here with such an incredibly rich assortment of brands to deal with, which gives us great optionality. The portfolio review is complete, and so we're acting. We made a decision not to share what we're acting on or what we might be doing publicly, but you can believe completely that we are acting. And we have options there, so we have multiple directions to go.

Speaker Change: Our own.

Speaker Change: Brick and mortar bricks and mortar and online BTC and of course wholesale we have not done as good a job of wholesale we about does a good job in our own retail specialty Americas was we could have and.

Bracken P. Darrell: I can't give you a timeframe when you'll see those actions come out, but obviously, we're going to announce them when they do. But I feel very good about where we are and very good about the review.

Dana Lauren Telsey: And just following up on that, when you think about the channels of distribution, wholesale, digital, and your own physical store base, in digital and your physical store base, what are you seeing there? And is the store base going to stay at the same level? What's your view on capital allocation to it? Thank you.

And we are editing stores.

Speaker Change: We're probably down about 115 stores over the last two years of beds will probably drop another 40. This year. So we're aggressively.

Speaker Change: Towards the reduction fleet have I got that right now so we're pretty aggressively managing the store count there, but I think they are really smart decisions.

Speaker Change: You don't have anything will get Martina.

Bracken P. Darrell: First, they're all super critical, and I would not prioritize one over the other. They each play a different role, and I think the mistake that could be made and probably hasn't been made in our industry is to swing the pendulum in one direction or another. I think, you know, boy, you don't know if you're winning if you're not in wholesale because you might just be winning in a private room, and if you're only in wholesale, you're not taking advantage of the amazing brand strength you have.

Speaker Change: Yes.

I think.

Speaker Change: What is important is the integrated marketplace.

Speaker Change: Holistically, we're going to look at the channels and the consumer journey and how we were going to try to be a better version of ourselves anyway, I think I spoke about.

Speaker Change: We'll integrate the close to wholesale a stronger partnership with the weakness globally.

Bracken P. Darrell: We're lucky because we have a very balanced distribution model between our own brick-and-mortar and online DTC and, of course, wholesale. We have not done as well a job in wholesale. We have not done as good a job in our own retail, especially in the Americas, as we could have, and we are ending stores. We're probably down about 115 stores over the last two years in bands. We'll probably drop another 40 this year, so we're aggressive, but that's a 20% reduction in total fleet, if I've got that right, Matt. So we're pretty aggressively managing the store count there, but I think they're really smart decisions. And do you want to add anything, Martino?

I think in more dynamic.

Speaker Change: <unk> in our stores.

Martino Scabbia Guerrini: I think what is important is the integrated marketplace view, how we're going to look at the channels and the consumer journey, and how we're going to try to be a better version of ourselves anywhere. A full integrated approach to wholesale, a stronger partnership with the winners globally, and I think a more dynamic elevation in our stores with the new format, new concepts, testing, adopting, and then scale across regions. So when I speak about testing in Shanghai and then adopting maybe into Europe or enhancing our flagships first in Europe and adopting them in the future in the U.S., I think the agility and the opportunity that we have more than ever.

Speaker Change: The new formats, new concepts testing adopting and then scale across regions. So when I speak about destiny, Shanghai, and then adopted into Europe or elevating our flagships. So as you would have ended up at <unk> adjusted and so institutional and you bet I think the agility and the opportunity that we have more than ever and so that is point.

Martino Scabbia Guerrini: And to Bracken's point, we have two legs in the way we're gonna walk and, hopefully, run, and it's really half and half. You know, there's wholesale and direct-to-consumer and all the best ways that we can innovate within.

I have two legs and the way we are going to work and hopefully run and it really has enhanced this wholesale and direct to consumer in the note. The best ways that we can innovate with them.

Speaker Change: Thank you.

Speaker Change: Thank you so much.

Dana Lauren Telsey: Thank you. The next question today is coming from Lorraine Hutchinson from Bank of America. Your line is now live.

Speaker Change: Thank you. Our next question today is coming from Lorraine Hutchinson from Bank of America. Your line is now live.

Lorraine Corrine Maikis Hutchinson: Thank you good afternoon.

Lorraine Corrine Maikis Hutchinson: Thank you. Good afternoon.

Lorraine Corrine Maikis Hutchinson: I wanted to follow up on the 600 million of debt.

Speaker Change: Cash flow target.

Speaker Change: <unk> is included in that is that the sale.

Speaker Change: Sale of the pack business.

Speaker Change: Just wondering what non core assets you had planned when you put that subcontract that won't together.

Lorraine Corrine Maikis Hutchinson: I wanted to follow up on the $600 million cash flow target. What exactly is included in that? Is that the JETS sale, the PACS business, anything else? I was just wondering what non-core assets you had planned when you put that $600 million together.

Speaker Change: Hey, Lorraine, the $600 million as free cash flow plus a little bit of benefit from noncore asset sales, it's not brand sales at all.

Speaker Change: Your physical assets.

Speaker Change: We said we are eliminating our aviation program a little bit of that got done in fiscal 'twenty for most of that will occur in 'twenty five in terms of the sell off of those assets. A couple of a couple of smaller things are building.

Matthew H. Puckett: Hey Lorraine, the 600 million is free cash flow plus a little bit of benefit from non-core asset sales. It's not brand sales at all.

Speaker Change: Part of that but most of the 600.

Speaker Change: Probably 90% range is kind of free cash flow and there is a little bit coming from sales of assets.

Speaker Change: In fact, if I can double that I'll take your comments to say, we have been extremely aggressive about consolidating space about.

Bracken P. Darrell: So these are physical assets. We said we were eliminating our aviation program, and a little bit of that got done in fiscal 24. Most of that will occur in 25 in terms of the sale of those assets. A couple of smaller things, a building, as part of that, but most of the 600, you know, probably 90% of the range is kind of free cash flow, and there's a little bit coming from the sale of assets.

Speaker Change: Exiting the expensive.

Speaker Change: Aircraft program that we had and it should not have them.

Speaker Change: Context of a turnaround like this so you can bet, we're going to be out of those planes when hanger pretty quickly now as we enter the new fiscal year, we've even where we could re lease space. We have we have pulled our space together. So good example, we've dropped two floors in our Denver offices to really bring people together will probably release that and get some benefit from that but the real focus is to get the culture moving into.

Matthew H. Puckett: If I could double down, I'll take a quick comment, though, to say we have been extremely aggressive about consolidating space, about, as Matt said, exiting the expensive aircraft program that we had and should not have in the context of a turnaround like this. So you can bet we're going to be out of those planes and that hangar pretty quickly now as we enter the new fiscal year.

Bracken P. Darrell: Even where we couldn't release space, we have pulled our space together. So, for example, we dropped two floors in our Denver office to really bring people together. We'll probably release that and get some benefit from that, but the real focus is to get the culture moving in a fast, intense, urgent way where people are in the office and running into each other, so creativity can happen, and a sense of urgency can be felt across the company.

Speaker Change: Fast chips urgent way we are.

People are in the office and running into each other so creativity can happen in a sense of urgency.

Speaker Change: It can be felt across the company and we're doing that across all of our sites. We're moving from two buildings for one building here.

Bracken P. Darrell: And we're doing that across all of our sites. We're moving from two buildings to one building here in Costa Mesa, where I am today, at Vans. So it's a unified practice, and you can feel the energy returning. Great. And then Bracken, I think you mentioned.

Speaker Change: In Costa Mesa, where I am today, so it's a generalized practice.

Speaker Change: You can feel the energy return.

Great and then as Bracken I think you mentioned that you don't have any intention of refinancing the debt would that imply brand sales would come ahead of.

Lorraine Corrine Maikis Hutchinson: Great. And then Bracken, I think you mentioned that you don't have any intention of refinancing the debt. Would that imply brand sales would come ahead of the 750 million maturity?

Speaker Change #100: $750 million maturity.

Bracken P. Darrell: Yes. Okay. Thank you. Thank you. The next question today is coming from Bob Durbel from Guggenheim. Your line is now live.

Speaker Change #100: Yes.

Speaker Change #101: Okay. Thank you.

Speaker Change #102: Thank you.

Speaker Change #103: Thank you. Our next question today is coming from Bob <unk> from Guggenheim. Your line is now life Hi, good afternoon.

Robert Scott Drbul: Hi, good afternoon.

Brian: Brian I was wondering if you could just talk a little bit more about your decision, bringing Paul Vogel sort of what attracted you to him as a candidate and then I guess the other thing is can you just give us an update on what youre seeing with Supreme and sort of the outlook there that you might be willing to share.

Bracken P. Darrell: Yeah, I'll start with Supreme. You know, Supreme continues to be a strong performer. We don't report those numbers transparently publicly, but you can bet they look good. We feel really good about them. The team is executing very well. I'm really proud of their performance. This quarter, they opened. We got a little piece of Shanghai in the period and a quarter of Seoul.

Speaker Change #103: Service.

Speaker Change #103: Supreme continues to be a strong performer, we don't report those public those members transparently publicly but you can basically look good we feel really good about the team is executing very well and I'm really proud of their performance.

Speaker Change #103: This quarter.

Speaker Change #104: We got a little little piece of Shanghai.

Speaker Change #104: In the period in a quarter or so so we're up to.

Bracken P. Darrell: So we're up to a very low store count and very high sales per store, and it's just performing very well. And I have to say, I've learned a lot from the Supreme team on things that we can do throughout the rest of the year. Paul, you know, we went through a very broad and deep slate of candidates across multiple industries and multiple parts of the world to really get to Paul Vogel, and I feel very good about him. I think the best CFOs have a strong backbone. They're tough, but they also have EQ. That's super important in the context of transformation and culture, like we're going through here.

Speaker Change #104: Very low store count with very high sales per store and its just performing very well.

Speaker Change #104: Learned a lot from the Supreme fever, I'll think of it.

Speaker Change #104: We can do throughout the rest of the year.

Paul Vogel: Paul we went through a very broad and deep.

Slate of candidates across multiple industries and multiple parts of the world to really get to Paul Vogel and I feel very good about him.

The best CFO R R.

Paul Vogel: Strong backbone or tough.

Paul Vogel: But they also have the EQ and especially that's super important in the context of the transformation culture like we're going through here, so I, especially like Paul because it does have that we started in finance went through IR. He then spent good solid length of time.

Bracken P. Darrell: So I especially like Paul because he does have that. He started in finance. He went through IR. He then spent a good, solid length of time through a lot of transition and change at Spotify and worked under one of the top and most respected CFOs in Silicon Valley at Netflix and then at Spotify, Barry McCarthy. And Barry had a stint at Peloton after that, but he really is a super CFO by every count, and he really trained Paul. So the combination of all those things and then just Paul's interpersonal skills really took him straight to the top.

Paul Vogel: A lot of transition and change at Spotify.

Paul Vogel: It worked under.

Paul Vogel: One of the top and most respected cfos in Silicon Valley.

Paul Vogel: And then as Spotify Barry Mccarthy.

Paul Vogel: <unk> stood at peloton after that but he really is a super CFO every account and he really trained fall. So the combination of all those things and it just pulls interpersonal skills.

Paul Vogel: It really took a straight to the top.

Speaker Change #106: Alright. Thank you good luck. Thank you.

Speaker Change #107: Thank you next question today is coming from Paul <unk> from Citigroup. Your line is now live.

Paul Lawrence Lejuez: Thank you. The next question today is coming from Paul Lejuez from Citigroup. Your line is now live.

Speaker Change #108: Hey, Thanks, guys.

Paul Lawrence Lejuez: Hey, thanks, guys. Um, you didn't have to cast a very broad guidance. Can you talk about how you plan to manage inventory and working capital? Are you assuming a benefit from inventory this year? Or are you just too low at this point?

Paul Lawrence Lejuez: Free cash flow guidance can you talk about how you plan to manage inventory and working capital whether you're assuming a benefit from some inventory. This year are you just too low at this point also not sure if I missed it but did you say capex slides.

Speaker Change #110: And if you could give that number and that's how it breaks down our spend.

Speaker Change #110: Yes.

Speaker Change #111: We didn't say anything specific about about inventory, we made a lot of progress in fiscal 'twenty four actually we've got further than we thought we would get in terms of bringing those levels down which is which is a tribute to across the organization.

Speaker Change #111: Both on the kind of the supply side as well as kind of getting it sold through and managed in the marketplace. So kudos to the team.

Speaker Change #111: So we end the year in a much better place than when we began the year in bundle better than we thought we would be I'd be remiss. If I said, we still didn't have some opportunity and we expect to continue to bring it down but it'll be pretty modest next year at least in our in our assumptions. So I'd say kind of low to mid single digit decline in inventory is what we're thinking about so much more.

Speaker Change #111: Modest.

Speaker Change #111: The impact next year from an overall working capital relative to inventory.

Matthew H. Puckett: Also, not sure if I missed it, but did you say what your CapEx was? And if you could give that number and just help break down the numbers on spent? Thanks.

Speaker Change #111: Capex, we didn't say, but it won't be so different from where we've been.

Speaker Change #112: About the breakdown on that Capex stores, new stores maintenance and even sure yes.

Speaker Change #113: Yes, so not going to give you numbers, but I will say percentage wise is little bit more focus towards <unk>.

Speaker Change #113: Sumer facing right in terms of in terms of stores in both new stores as.

Speaker Change #113: As well as refreshment and remodeling of.

Speaker Change #113: The current store base.

Speaker Change #114: Great. Thank you good luck.

Speaker Change #115: Thank you so much.

Speaker Change #116: Thank you next question is coming from Adrian <unk> from Barclays. Your line is now live.

Matthew H. Puckett: Yeah, so we didn't say anything specific about inventory. We made a lot of progress in fiscal 24. Actually, we got further than we thought we would get in terms of bringing those levels down, which is a tribute to, you know, across the organization, both on the kind of the supply side as well as kind of getting it sold through and managed in the marketplace. So kudos to the team.

Matthew H. Puckett: Okay. Thank you very much Matt.

Matthew H. Puckett: Matt Thanks for all your help over the years and best of luck.

Adrian: So my first question brackets for you on inventory when you oftentimes when when you take a kind of big cut inventory you kind of take a broad brush approach, obviously TNF for a cleaner.

Adrian: In style and SKU reduction has been done and how did you strategically kind of go through that the different categories.

Speaker Change #118: And then Matt any any notion that forecast for the end of FY 'twenty five the leverage ratio or how should we think about net debt I guess, excluding asset sales.

Well, thank you very much Adrian I'll start with the inventory.

Matthew H. Puckett: So we end the year in a much better place than when we began the year and probably a little better than we thought we would be. I'd be remiss, though, if I said we still didn't have some opportunity, and we expect to continue to bring it down. But it'll be pretty modest next year, at least in our assumptions. So I'd say, you know, a kind of low to mid-single digit decline in inventory is what we're thinking about. So a much more modest impact next year from overall working capital relative to inventory. CapEx we didn't say, but it won't be so different from where we've been.

Matthew H. Puckett: How about the breakdown on that capex, new stores, new stores, maintenance, and even share? Yeah, so I'm not going to give you the numbers, but I will say percentage-wise.

Speaker Change #119: I would say it was pretty surgical or inventory reduction, we're really focused especially you talked about the inventory in the channel.

Speaker Change #119: Really our real focus here was to clear out the channel as some of the.

Speaker Change #119: The older icon, so we have room for progressive.

Speaker Change #119: It's to flow with our newer products to float it like new school and so I think that is.

Speaker Change #119: Service Super well over the next coming quarters.

Speaker Change #120: The second part of that Chris.

Yes, nothing on leverage we haven't we haven't given a number there and are prepared to do that but you could probably do the math yourself relative to the net debt but.

Speaker Change #120: It's going to be down a few hundred million dollars based on.

Speaker Change #120: I'll call. It the base plan, which doesn't include any brand asset sales, but.

Speaker Change #120: As Bracken indicated ultimately that's not our plan our plan is to ensure that we're positioned to pay off that 750, which is due in April and honestly it could be paid in March with no penalty as well.

Speaker Change #121: Fantastic. Thanks, so much.

Speaker Change #122: Thank you.

Speaker Change #123: Thank you next question is coming from Jonathan Komp from Baird. Your line is now live.

Yes, hi, good afternoon. Thank you if I could just follow up on the $600 million cash outlook for the year I know you've talked about embedding sequential improvement in the top line could could I ask if that outlook implies getting back to growth at some point our total revenue.

Speaker Change #123: During the year at some point.

Speaker Change #124: And then just separately one follow up Bracken I don't know if you can call I've talked to or have a view.

Speaker Change #125: Given the discussion about the improving predictability and forecasting ability is there a point in the near future or Youre thinking about it the right timing to re instill broader financial targets.

Speaker Change #126: Thanks again.

Speaker Change #127: Okay, Let me answer the first one.

Speaker Change #128: I'm Gonna effects, I mean, effectively Dodge your question about it.

Speaker Change #128: When we go forward, but we did see sequential improvements hope there is sequential and that theyre consistent across the year, but I think generally speaking when you look across the year youre going to see us get better and better.

Speaker Change #128: I will not answer your question about whether we're going to be that's going to show a positive number by the end of the year, but it will come back to them.

Speaker Change #129: Pretty optimistic about the business in general you can feel it I hope you can feel it in terms of reinstating guidance, Paul and I've talked about a lot of things about that one.

Speaker Change #129: We talked with them as early interviews I think we all liked the idea of reinstating guidance, we've now got five consecutive months.

Speaker Change #129: Predictability relative to where we were in the past I mean, it really is a big change I also feel good about steps, we're taking across the business to really improve the overall performance and make future improvement.

Speaker Change #129: On top of its predictability a reality so stay tuned.

Speaker Change #129: I don't think we're too far away, but we're not ready to do that.

Speaker Change #130: Great. Thanks, Thank you.

Speaker Change #131: Thank you next question is coming from Ike <unk> from Wells Fargo. Your line is now live.

Speaker Change #132: Hey, guys. Thanks, a lot.

Speaker Change #131: Matt.

Matthew H. Puckett: Couple of quick ones.

Speaker Change #133: Just like Capex I think you said kind of a similar.

Speaker Change #133: Historical or something like that.

Speaker Change #133: Same response for DNA as well.

Speaker Change #134: DNA will be a little bit lower.

Speaker Change #134: Because there were some one time write offs in fiscal 'twenty for that probably won't repeat to the same degree, but it will be closer to where we were.

Speaker Change #134: If you look back to fiscal 'twenty, three I would say suggests.

Speaker Change #135: Got it Okay and then.

Speaker Change #136: So youre not going to give an exact number but maybe just.

Speaker Change #137: Looking at Q4 Q4's gross margin decline.

Speaker Change #138: Giving us context, the way you are kind of talking about the.

Speaker Change #138: Clearance activity needed in the first quarter it sounds like it's going to be.

Speaker Change #138: The larger.

Speaker Change #138: Larger erosion sequentially versus <unk>.

Speaker Change #139: Is there anybody put context around how much.

Speaker Change #139: How much impact we should expect.

Speaker Change #140: However, you'd like to answer that and then my question is a follow that one up.

Speaker Change #141: After the first quarter like are you quote unquote clean like do you think the gross margins can start to flatten out or is there more work to be done even after the first quarter.

Speaker Change #142: Matt It before.

Speaker Change #143: I'm going to add another question.

Speaker Change #144: Because I want to get yourself and make sure those discussions clear about Q1. Once you give a general overview of Q1 since we set up will start.

Matthew H. Puckett: Yeah, so I'm not going to give you numbers, but I will say, percentage-wise, it is a little bit more focused on the consumer, right, in terms of stores and both new stores, as well as refreshment and remodeling of the current store base.

Closed loan.

Speaker Change #145: Yeah. So.

Adrienne Eugenia Yih: Thank you. The next question is coming from Adrienne Yih from Barclays. Your line is now live.

The two things we talked about revenue and margins. Let me just let me give you a little bit more color. There I think that's that'll be helpful for everybody.

Speaker Change #145: We said top line similar to Q4, excluding the reset right. So we reported we reported down 13 reset a couple of points. So that would give you a sense. There I think I would say is a couple of things to remember as you think about that.

Speaker Change #145: It's the smallest quarter of the year is a little bit more outsized exposure to the Americas region from a penetration standpoint, Americas kind of 55% of the business in the first quarter and a little less than less than 50, even in our most recent quarter right. So there's that.

Speaker Change #145: Remember the spring 'twenty, four wholesale order books, which impacted fiscal.

Speaker Change #145: 24, Q4, we're kind of comparable impact Q1 order books are written across the season right. So the implications from Q4 extend into Q1.

Speaker Change #145: We'd have a little bit of a different expectation as we look into the later latter parts of the year and future seasons, and then we're comping a really big growth number in the APAC region last year, which was nearly 20% is kind of post COVID-19 reopening.

Speaker Change #145: There was some pent up demand in the marketplace. We're planning more conservatively in the two year stack for the region will still be double digits, but much more much more modest in terms of our expectations in the short term so a little bit of color. There to help you understand why we why we think the thing while we think overall it looks the same on the surface for Q1, but there is some interest in.

Speaker Change #145: Factors gross margin I'll just tell you.

It'll be down relatively similar.

Speaker Change #145: To what it was in Q4 from a year over year point of view I think that's the simplest way to think about it and probably gives you everything you need.

Speaker Change #146: Awesome, Thanks, Matt Thanks Bracken.

Ed: Thank you Ed.

Speaker Change #148: Thank you. Our final question today is coming from Sam Poser from Williams trading your line is now live.

Sam Poser: Thank you. Thank you for taking my question I think you've covered almost everything.

Sam Poser: I guess you've chose it sounds to me one you've chosen the brands you want to.

Sam Poser: Potentially sell.

Speaker Change #150: Next issue has been going on for a while so is there any update there and two.

Speaker Change #151: As far as thinking about how the expenses fall away.

In.

Speaker Change #151: The year over year expenses in the first quarter just to complete the whole picture there can you.

Speaker Change #152: Matt maybe help us with that and.

Speaker Change #153: Sorry to see you go.

Speaker Change #154: Let me, let me start with the tax and then I'll hand, it back to that of expenses Unpacks, what I would say about the update I would give you on taxes, while taxes really a good business.

Speaker Change #154: Four four very well at the top and bottom line.

Speaker Change #154: And we have made their decisions and the portfolio review in Texas for sale.

Speaker Change #154: We have optionality in our review so that's all I would really say that you want to answer that question.

Speaker Change #155: Yes, so for SG&A and we are starting to see reductions right and we saw a little bit in Q4 actually fiscal 'twenty four spend was down about 3% on a constant dollar basis. So we're seeing reduction.

Speaker Change #155: The benefits of the actions, we're taking around cost savings, we've gotten something that's coming in terms of expensing, an acceleration of that as we move in through fiscal 'twenty. Five so I think thats one thing, but remember some of that is going to hit gross margin.

Speaker Change #155: So not all of it's SG&A, probably more more like 85%, 90% of it will hit SG&A.

Speaker Change #155: And we're going to reinvest we've talked about.

Speaker Change #155: A quarter to a third or maybe even a little bit higher than that depending on.

Speaker Change #155: Circumstance in our and our confidence in the places that we're looking to reinvest so where we're.

Speaker Change #155: We're going to start.

Speaker Change #155: <unk> seen that be more meaningful as we look forward and get more.

Speaker Change #155: Kind of more certain in terms of those directions, we got incentive compensation that is a headwind.

Speaker Change #155: And other inflationary factors, whether it's whether it's compensation merit things like that certainly inflationary factors in our stores and our distribution centers. So theres. There are several there are several puts and takes but the underlying cost savings program will accelerate and we are really focused on right sizing and driving the SG&A down.

Speaker Change #155: The underlying SG&A down to an appropriate level, given where we are from a business standpoint and at the same time looking looking to reinvest and I think thats.

That's the intent of the program as we started it and that remains exactly where we are.

Brian: Thank you we've reached end of our question and answer session I would like to turn the floor back over to Brian <unk> for any further or closing comments. Thank you. Thank you Sam I just wanted to say things are for things.

Bracken P. Darrell: Thank you. Thank you very much, Adrienne. I'll start with the inventory count. You know, I would say it was pretty surgical.

Adrienne Eugenia Yih: Great. Thank you very much. Matt, thanks for all your help over the years and best of luck.

Bracken P. Darrell: Our inventory reduction really focused, especially when you talk about the inventory in the channel. You know, our real focus here was to clear out the channel of some of the older icons so we had room for progressive products to flow in or newer products to flow in, like New School. And so I think that's going to serve us super well over the next coming quarters. Back to when I answered the second part of that question.

Bracken P. Darrell: So my first question, Bracken, is for you on inventory. Oftentimes when you take a kind of big cut at inventory, you kind of take a broad brush approach. Obviously, TNF was cleaner. How much in style or SKU reduction has been done, and how did you strategically go through the different categories? And then, Matt, any notion in the forecast for the end of FY25 of a leverage ratio, or how should we think about net debt, I guess, excluding asset sales?

Matthew H. Puckett: Yeah, nothing on leverage. We haven't given a number there, and we aren't prepared to do that. But, you know, you could probably do the math yourself relative to the net debt. But, you know, it's going to be down a few hundred million based on, I'll call it, the base plan, which doesn't include any brand asset sales. But as Bracken indicated, ultimately, that's not our plan. Our plan is to ensure that we're positioned to pay off that 750, which is due in April and, obviously, could be paid in March with no penalties.

Matthew H. Puckett: Fantastic. Thanks so much.

Speaker Change #156: I am Super excited about the team here.

Jonathan Robert Komp: Thank you. The next question is coming from Jonathan Komp from Baird. Your line is now live.

Jonathan Robert Komp: Yeah, hi, good afternoon. Thank you. Um, if I could just follow up on the 600 million cash outlook for the year. I know you've talked about embedding sequential improvement in the top line. Could I ask if that outlook implies getting back to growth at some point for total revenue, you know, during the year at some point? And then, separately, one follow-up question, Bracken, I don't know if you and Paul have talked or have a view, given the discussion about improving predictability and forecasting ability, is there a point in the near future you're thinking about as the right timing to reinstill, you know, broader Thanks again. Yeah Okay.

Speaker Change #156:

Bracken P. Darrell: Thanks again. Yeah. Okay. Let me answer this first.

Bracken P. Darrell: You know, I'm going to effectively dodge your question about this being how we go positive. You know, we did say sequential improvements. I hope they're sequential and that they're consistent across the year. I think, generally speaking, when you look across the year, you're going to see us get better and better. I will not answer your question about whether we're going to be, that will show a positive number by the end of the year, but we'll come back to that.

Speaker Change #156: I'm, even more excited about the actions because they've already happened.

Bracken P. Darrell: I'm pretty optimistic about the business in general. You can feel it. I hope you can feel it. In terms of reinstating guidance, you know, Paul and I have talked about a lot of things, not that one. We talked about that in his early interviews.

Bracken P. Darrell: I think we all like the idea of reinstating guidance. We've now got five consecutive months of predictability relative to where we were in the past. I mean, really, it's a big change. But I also feel good about steps we're taking across the business to really improve overall performance and make future improvement on top of this predictability a reality. So stay tuned, you know. I don't think we're too far away, but we're not ready to do that.

Speaker Change #156: They are ongoing.

Irwin Bernard Boruchow: Thank you. The next question is coming from Ike Boruchow from Wells Fargo. Your line is now live.

Irwin Bernard Boruchow: Hey guys, thanks a lot. Um, Matt, a couple quick ones. Just like CapEx, I think you said it was kind of similar to historical or something like that, is it kind of the same response for DNA as well?

Speaker Change #157: And it's great to see green shoots start to come through in some of these areas have been talking about so I think those are a good indication of what's to come I do want to just close on on that this is as we said it's his last earnings call.

Matthew H. Puckett: DNA will be a little bit lower because there were some one-time write-offs in Fiscal 24 that probably won't repeat to the same degree, but it will be closer to where we were, you know, if you look back to Fiscal 23, I would suggest.

Irwin Bernard Boruchow: Okay, and then I know you're not going to give an exact number, but maybe just looking at Q4's gross margin decline as kind of giving us context, the way you're kind of talking about the clearance activity needed in the first quarter, it sounds like it's going to be a larger erosion sequentially versus 4Q. Is there any way to put context on how much, you know, how much impact we should expect? However, you'd like to answer that,

Matthew H. Puckett: And then my question, just to follow that one up, is, after the first quarter, are you, quote unquote, clean? Like, do you think the gross margins can start to flatten out? Or is there more work to be done even after the first quarter? To Matt.

Matthew H. Puckett: See, Matt, before you answer that, maybe I'm going to add another question, because I want to get this out and make sure this discussion is clear about Q1. Why don't you give a general overview of Q1, Matt, since we set up those guardrails in the opening, but let's close on that.

Speaker Change #157: Paul will be an excellent and I would really like to take the opportunity to thank you for your really terrific contributions over 23 years of service to be.

Speaker Change #157: We will always be grateful for all the years, you've had you've worked here and just how dedicated you've been the positive impact you've had from start to finish.

Speaker Change #157: And it will be felt that'll be felt way beyond your tenure, Matt. So thank you.

Matthew H. Puckett: The two things we talked about, right? Revenue and margins. Let me just give you a little bit more color there.

And thanks to all of you for joining the call.

Matthew H. Puckett: I think that'll be helpful for everybody. We said the top line would be similar to Q4, excluding a reset, right? So we reported down 13, reset a couple of points. So that'll give you a sense of where we are. I think I would say a couple things to remember as you think about that. It's the smallest quarter of the year, so it has a little bit more outsized exposure to the Americas region from a penetration standpoint. America's, kind of 55% of the business in the first quarter and a little less than, you know, less than 50 even in the most recent quarter, right? So, there's that.

Matthew H. Puckett: Remember, the spring 24 wholesale order books, which impacted fiscal 24 Q4, will kind of comparably impact Q1. You know, order books are written across the season, right? So the implications from Q4 extend into Q1. We would have a little bit of a different expectation as we look into the later parts of the year and future seasons. And then we're copying a really big growth number in the APAC region last year, which was nearly 20% as a kind of post-COVID re-opening where there was some pent-up demand in the marketplace.

Matthew H. Puckett: We're planning a little more conservatively, and, you know, the two-year stack for the region will still be double digits, but much more modest in terms of our expectations in the short term. So a little bit of color there to help you, I think, understand why we think the thing, why we think overall it looks the same on the surface for Q1, but there are some factors. Gross margin, I'll just tell you, it'll be down relatively similarly to what it was in Q4 from a year-over-year point of view. I think that's the simplest way to think about it and probably gives you everything you need.

Speaker Change #158: Thank you that does conclude today's teleconference. You may disconnect. Your lines at this time and have a wonderful day we thank.

Operator: Thank you. That does conclude today's teleconference. You may disconnect your line at this time and have a wonderful day. We thank you for your participation today.

Irwin Bernard Boruchow: Awesome. Thanks Matt. Thanks Bracken.

Samuel Marc Poser: Thank you. Our final question today is coming from Sam Posner from William Trading. Your line is now live.

Samuel Marc Poser: Thank you. Thank you for taking the time to answer my question. I think we've covered almost everything. I guess you've chosen, it sounds to me, one. You've chosen the brands you want to potentially sell. The PAX issue has been going on for a while, so is there any update there? And two, as far as thinking about how the expenses fall away in, you know, the year-over-year expenses in the first quarter, just to complete the whole picture there, can you... Matt, maybe help us with that, and sorry to see you go.

Bracken P. Darrell: Let me start with PACS, and then I'll hand it back to Matt on the expenses. On PACS, what I would say about the update I give you on PACS is, wow, PACS is really a good business. It continues to perform very well at the top and bottom lines. And we have made our decisions in the portfolio review, and PACS is for sale. We have optionality in our reviews, so that's all I would really say.

Matthew H. Puckett: Yeah, so for SG&A, you know, we're starting to see reductions, right, and we saw a little bit in Q4. Actually, fiscal 24 spend was down about 3% on a constant dollar basis, so we're seeing reductions.

Matthew H. Puckett: The benefits of the actions we're taking around cost savings We've got some things. That's coming in terms of, I'd say, an acceleration of that as we move in and through fiscal 25, so I think that's one thing. But remember, some of that is going to hit gross margin, you know, not all of it's SG&A, probably more like 85-90% of it will hit SG&A. And we're going to reinvest. We've talked about, you know, a quarter to a third or maybe a little bit higher than that, depending on our circumstances and our confidence in the places that we're looking to reinvest.

Matthew H. Puckett: So we're going to start seeing that be more meaningful as we look forward and get more, you know, kind of certain in terms of those directions. We've got incentive compensation that is a headwind and other inflationary factors, whether it's compensation, merit, things like that, certainly inflationary factors in our stores and our distribution centers. So there are several puts and takes, but, you know, the underlying cost savings program will accelerate, and we're really focused on right sizing and driving the SG&A down to an appropriate level, given where we are from a business standpoint, and at the same time looking to reinvest. And I think that's the intent of the program as we started it, and that remains exactly where we are.

Speaker Change #157: Thank you for your participation today.

Bracken P. Darrell: Thank you. We've reached the end of our question and answer session. I'd like to turn the floor back over to Bracken for any further closing comments. Thank you.

Bracken P. Darrell: Thank you. Thank you, Sam.

Bracken P. Darrell: You know, I just want to say three things or four things. You know, I am super excited about the team here. I'm even more excited about the actions because they've already happened, and they're ongoing. And it's great to see green shoes start to come out in some of these areas we've been talking about. So I think those are a good indication of what's to come. I do want to just close on that. You know, this is, as we said, his last earnings call. Paul will be in the next one.

Bracken P. Darrell: And I would really like to take this opportunity to thank you for your really terrific contributions over 23 years of service to VF. We will always be grateful for all the years you've worked here and how dedicated you have been, the positive impact you've had from start to finish. And that will be felt way beyond your tenure, Matt, so thank you. And thanks to all of you for joining me today.