Q2 2025 V.F. Corp Earnings Call
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Abby: Ladies and gentlemen, thank you for standing by. My name is Abby and I will be your conference operator today. At this time I would like to welcome everyone to the VF Corporation, a second quarter fiscal year 2025 earnings conference call.
Abby: All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. And if you would like to ask a question during that time, simply press the star key, followed by the number one on your telephone keypad. If you would like to withdraw your question, press star one a second time.
Speaker Change: Thank you, and I would now like to share the conference over to Allegra Perry, Vice President of Investor Relations. You may begin.
Allegra Perry: Hello, and welcome to the F Corporation's second quarter fiscal 2025 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.
Allegra Perry: These uncertainties are detailed and documents filed regularly with the SEC.
Allegra Perry: Unless otherwise noted, a mantra for to on today's call will be on an adjusted, constant dollar and continuing operations basis.
Allegra Perry: which we've defined in the press release that was issued this afternoon and which we use as leave numbers in our discussion because we believe they more accurately represent the true operational performance and underlying results of our business.
Allegra Perry: You may also hear us referred to reported amounts, which are in accordance with US gap. Reconciliation of gaps measures to adjusted amounts can be found in the supplemental financial tables included in the press release.
Allegra Perry: 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 President and Chief Executive Officer Bracken Darrell, an EVP and Chief Financial Officer Paul Vogel. Following our prepare remarks will open the call for questions. I'll now hand over to Bracken.
Bracken Darrell: Thank you Allegra, and thanks all of you for joining us.
Bracken Darrell: This is a fun week for us. Today we'll update you on Q2 and get all the discussions of it and Q3 behind us.
Bracken Darrell: The end answer of our will give you a deeper look at what our game plans are have.
Bracken Darrell: I'm putting in a plug now for the event which will be broadcast live and you get to meet a few more people from our team.
Bracken Darrell: Q2 was another quarter of a really good progress. We delivered on our expectations, consistent with the guardrails we provided last quarter.
Bracken Darrell: and the V.S. transformation continues on within that, or making strong strides in advancing our priorities.
Bracken Darrell: While Q2 revenue was still down as we expected, we are a third straight quarter of sequential improvement in the decline rate, with moderate and declines advanced in the Americas and really almost everywhere else too.
Bracken Darrell: We expanded gross margins and we did a little better on SGA and I brought it to our own expectations.
Bracken Darrell: Paul is talking to the pronounceover of the old slater in the call.
Bracken Darrell: Moving on to reinvent, as we pass the one year of an anniversary when we introduce you to the program, my confidence and excitement about the transformation taken place at VF only continues to grow.
Bracken Darrell: I'll save a lot of the detail in future plans for later this week at the investor net, but today I'll give you a high level update on the further progress we made in Q2 on our four stated priorities.
Bracken Darrell: The first priority was to lower our cost base.
Bracken Darrell: We generated another $65 million in cost savings during Q2 and as guided we've now fully executed all actions to deliver $300 million in cost savings by the end of this fiscal year.
Bracken Darrell: We fully intend to go beyond this initial savings target as we'll discuss Wednesday.
Bracken Darrell: We're also continuing to reinvest some of that back into the business as you know, focused on the key areas of product and brand building.
Bracken Darrell: The second priority was to strengthen our balance sheet.
Bracken Darrell: We made a significant step forward this quarter. Our work to normalize inventory continues and we delivered a further reduction in the quarter despite building for our upcoming peak season.
Bracken Darrell: Inventories were down 13% of the end of the quarter versus last year.
Bracken Darrell: Net debt was further reduced by almost $50 million compared to this time last year.
Bracken Darrell: and of course you will see that just after the end of the quarter we concluded this Supreme Investiture. The next proceeds will almost 1.5 billion dollars for the bank.
Bracken Darrell: and just as fast we went right back out to pay the billion dollar term loan after the quarter closed.
Bracken Darrell: and we're on track to pay the next term loan of $750 million by the end of the year.
Bracken Darrell: Third one was that we would fix the U.S. business. Our America's business improves the quenchily with revenue down 9% in Q2 compared to 13% down 13% in Q1.
Bracken Darrell: The new fully operational resale platform is starting to deliver tangible results driven by a quarter our greater emphasis on brand elevation and full price sales.
Bracken Darrell: Importantly, we continue to improve our forecasting accuracy, and have now delivered 10 consecutive months on our internal plan.
Bracken Darrell: and the last one delivering the Vans turnaround. The brand's overall performance in Q2 was down 11% a significant improvement relative to last quarter when we were down 20%
Bracken Darrell: This down 11% was as expected. There are further signs that we're making progress, which we'll continue to build under Sun's leadership.
Bracken Darrell: For a Prague standpoint, New School continues its strong momentum, and further strengthened its position as the number two franchise globally.
Bracken Darrell: We're seeing some encouraging results from other new product franchises lost over the summer, particularly upland and high lane.
Bracken Darrell: Our brand elevation is starting to resonate too. Through the OTW of Premium Label and Influencer Program, fans is targeting influencers and early adopters.
Bracken Darrell: using cities and moments in product collaborations.
Bracken Darrell: During the University of Fashion Week a few weeks ago, the branding gaze with fashion influencers made a significant cultural impact by spotlighting the Satoshi and Perlized O.T.W. classics.
Bracken Darrell: which we sold through at 100% levels. I'll be wearing your pearl eyes, OTW classics against Brent Hyder, our CHRO's better recommendation because I think you'll love them.
Bracken Darrell: The Pete Parachial Collaboration was sold out in five minutes upon launch in September. And our consumer search, our consumer search interest was trended positive and cue to and key markets.
Bracken Darrell: Now let me give you a short update on the North Face.
Bracken Darrell: As the previous last quarter revenue is down sequentially in Q2 because of the strong super strong comparison to prior year when we were up 17%.
Bracken Darrell: But we were right in line with the God Realty Game Last Quarter. During the quarter we saw, particularly strong performance from Black Pack steering back to school.
Bracken Darrell: The brand also continues to have strong growth in ATAC during the by-slement series.
Bracken Darrell: with some big wins in Amy at two where we delivered our strongest month ever in September. And where our athlete Katie Shied broke a course record and won the famous Ultra Trail Demodla Race in August, wearing head to toe the North Face.
Bracken Darrell: The brand launched its first global brand campaign in over three years, generating a strong response on digital media, particularly with women.
Bracken Darrell: and we're investing in our stores. A recently open North Thaste Door on 6th Street in Williamsburg, Brooklyn, includes our first ever shopping shop for the North Thaste Renewed, a program we've had in place to refurbish recycle and resell the North Thaste product.
Bracken Darrell: We're also excited and recently announced our commitment to a new Fifth Avenue location which will open the fall of 2025.
Bracken Darrell: Finally, we're proud that Time magazine recently ranked the North States of the world's best friend in the outdoor apparel category.
Bracken Darrell: Turning to Timberland, revenue for the brand continues to improve sequentially to negative 3% in Q2, compared to negative 9% in Q1.
Bracken Darrell: The Yellow Boot continues to perform well globally, with ongoing momentum enhanced by the new iconic campaign launched in September, which is driving traffic to our stores in online and also contributing to the growth of the boot.
Bracken Darrell: Looking ahead, we feel good about where we're heading to. We expect to drive further sequential improvement that builds on the progress we've made in the last few quarters.
Paul Vogel: Now I'll head it over to Paul who will take you to the financials of Mortodale and I'll come back to the end of wrap it up. Paul. Thanks, Bracken. Good afternoon everyone. It's been a great first four months. I'm looking forward to unveiling more information about our long-term financial potential at our investor day on Wednesday.
Paul Vogel: Moving on to Q2, as Bracken mentioned, we continue to advance the F transformation and continue to move forward, as we made progress in reducing costs, strengthening the balance sheet, fixing the Americas and turning around the hands.
Paul Vogel: Recap in the quarter Q2 was large in line with expectations, was a quenchable improvement in revenue and a positive inflection in gross margin.
Paul Vogel: Total Q2 revenue is down 6% year over year, which marks an improvement from down 10% in Q1.
Paul Vogel: By Brandt, bands were down 11% versus last year, improving from 21% to 21%. We are seeing the benefits from the inventory cleanup actions taken over the past few quarters, particularly on profitability as we right-size the Brandt's cost structure.
Paul Vogel: The North Face Revenue is down 4% in line with the Guard Real Zweegiv last quarter, given the strong prior year to Q2 comp of up 17% from shipping timing normalization.
Paul Vogel: Greater China continued its strong momentum, so this was all set by ongoing America's pressure.
Paul Vogel: Timberlain was down 3% in the quarter versus Q1 down 9% as we saw strong growth in premium boots. And rounding out our top four brands, Dickies was down 11% in Q2, and improving from Q1 to the client of 14% and the third sequential quarter of improvement.
Paul Vogel: By region, the Americas was down 9% in due to compared to down 13% to one. In a media we were down 5% in the quarter, but September marked the biggest month ever for the region. So wholesale trends weighed on performance. The A5 region was up 5% in due to the advice strength in the north face and China.
Paul Vogel: By China we saw sequentially improving in both global DTC and wholesale, the DTC improved to down 8% after contracting 13% to 1% and also down 5% after being down 7% to 1%.
Paul Vogel: Gross Morton was up 120 basis points for his last year to 52.2% in selecting a positive and in-line with their expectations and primarily do the product cost tailwinds.
Paul Vogel: Estudy dollars were down 14% for this last year or down 1%. This was better than our expectations of up 25 to 35 million as we realized higher reinvent savings in the quarter. In addition, there was a shift of some spending from Q2, as a Q3, roughly 10 to 15 million.
Paul Vogel: We did see SGA delivered to overall of 180 basis for injury, it's a 40.8% of sales.
Paul Vogel: During the quarter we realized approximately 65 million of total reinvents savings, bringing us to a cumulative total of approximately 200 million since we initiated the program. We are on track to deliver 300 million of savings.
Paul Vogel: The savings offset additional investment in marketing and product ahead of the holiday season, more normalizing sense of compensation and inflation.
Paul Vogel: This resulted in operating margin of 11.4% down 60-based points for our last year and operating income of 350 million.
Paul Vogel: The Louderings for Sheriff's 60th Sense was down three cents for his fiscal 24, A to buy a lower tax rate for the quarter. This reflects favorable discrete items within the quarter.
Paul Vogel: Turning to the balance sheet, we continue to make good progress on imitories as we ended due to down 13%. And as Bracken mentioned, we completed the sale of supreme at the beginning of the month and made an important step towards our key financial priority of the leveraging our balance sheet by paying down the $1 billion term loan.
Paul Vogel: Before I move into detail to our expectations for Q3, I want to share some thoughts on how we will be issuing guidance. Moving forward, we will provide revenue and profit guidance one quarter out starting with Q3.
Paul Vogel: Overall, we expect you to reach to show further sequential improvement across the business.
Paul Vogel: For revenue we expect U3 to be in the range of 2.7 to 2.75 billion, translating to a decline of down 1% to down 3% on a reported basis. We are modeling FXF at approximately a negative 100 basis point impact on a reported growth rate.
Paul Vogel: Distra and Reflect, they continue stabilization of revenue trends during my wholesale improvements compared to last year when, as a reminder, we took inventory actions which impacted both Q3 and Q4 of fiscal 24.
Paul Vogel: Moving down to PNL, we expect Q3 operating income to be in the range of 170 to 200 million, with gross margin up year over year benefiting from lower product costs and fewer reserves. And SGNN is expected to be up modestly year over year, mainly results of the reintroduction of incentive compensation as we have discussed in prior quarters.
Speaker Change: Additionally, you expect more variability in the tax rate by quarter for Q3 or expecting the tax rate to be in the low 20s for as Q2 and the mid-teens.
Speaker Change: And while we're not providing Q4 guidance at this time, I want to give a little bit of color on expectations for the quarter. For starters, we expect Q4 to show another quarter of the potential improvement in your year revenue trends. We expect gross margins to be up and estimate to grow at a similar rate to Q3.
Speaker Change: For the full year we expect three cast below of around 425 million with core fundamentals in line with prior guidance. When looking at the 600 million guidance we gave earlier in the year, our updated forecast reflects the 140 million impact from the sale of supreme and a slightly higher benefit from the sale of non-courses glasses.
Speaker Change: Additionally, given the success so far of our re-enact-vent initiatives, we've decided to fund an additional 50 million into cost savings, which should drive additional savings in fiscal 26.
Speaker Change: So in summary we continue to make progress on our key financial priorities. I'm looking forward to speaking to you all again in a couple of days and providing further insights to our financial strategy. I'll now turn it back over to the operator for Q&A.
Speaker Change: Thank you, and we'll now begin the question and answer session. If you have dialed in and would like to ask a question, please press star 1 on your telephone key pad to raise your hand and join the queue. If you would like to withdraw your question, simply press star 1 a second time.
Speaker Change: If you're called upon to ask your question and are listening via speakerphone on your device, please take up your handset and ensure that your phone is not on me when asking your question.
Speaker Change: To be able to take as many questions as possible, we do ask that you please limit yourself to one question. Again, it is Star One to join the Q.
Speaker Change: And your first question comes to mind of Adrian Yee with Barclays. Your line is open.
Adrian Yee: Yes, good afternoon, great to see the progress.
Adrian Yee: Bracken, you talked about sort of increasing being able to kind of predict the business.
Adrian Yee: and really curious what are the drivers of the business that are becoming more predictable and I really wanted to share about specifically those that drive the top line and then obviously particularly van followed by TNF.
Adrian Yee: and then Paul, what are the incremental investments that you will be contemplating? Is it brand-building, demand creation outside of the incentive company? Thank you very much.
Speaker Change: Thank you, Adrian. Thanks a lot for the comment. Yeah, so this is 10 consecutive quarters in a row in the Americas, which was our most difficult thing to predict before. And, you know, we're really focused on, I'll focus really on the PML. It's really...
Speaker Change: Natalie Revonu, but also our gross margins in our STNA. You know, we're really able to predict across the board underneath that to be able to predict that. You've got to have...
Speaker Change: and I'll stay with revenue for a second. You've got a pretty good sense for every part of the world what they're going to do. So it's obviously been true in the Americas, but it's also been true in EME and A-PAC. So I just feel really good about our ability to roll up a forecast and have it be pretty accurate.
Speaker Change: Yeah, and only investment size, really two things. It's really on product and marketing. We'll continue to make sure that we can invest in those areas as we reinvest the savings from reinvestment.
Speaker Change: Thank you very much. Thanks, Adrian.
Speaker Change: and your next question comes from Laurent Vassalasko with BMP Parabelle. Your line is open.
Laurent Vassalasko: Vote good afternoon. Thank you very much for taking my question and congrats Bracken and Paul for the progress you're making. Bracken, I was curious, you know, how is the health of the Errol Brawl wholesale business?
Laurent Vassalasko: And what do you see in the inventory of levels look like going into the holidays? And then maybe Paul just on the cash flow guide, can you just maybe if you could give us some guard whales around?
Laurent Vassalasko: The free cash flow to the second half, I think it's about 700 million. How do we think about it between three Q and four Q?
Speaker Change: Thank you, Laura. And on the overall wholesale business, I feel good about it. I think we're really on the right trajectory. A really long-term back trail here across the board. And the America's, the creation of this America's region has really had a strong impact, especially with our key accounts there, where we're starting to see good strong momentum.
Speaker Change: In terms of channel inventories, I feel good about our channel inventories around the world. I mean there are few puts and takes I would say were a little short in some places where the winter came like last year so people probably a little slow to take some of the inventory in for the north-facing things.
Speaker Change: and those parts of the world but overall I feel really good about the channel inventory there.
Speaker Change: and then I'd say we're probably a little high in places like China where it's been, you know, honestly, in a turnaround you've got
Speaker Change: You've usually got a few places that are slow to turn, I think bands is one of the slowest to turn there in China where it's kind of too stiff about four and two steps back But overall I feel really good about the bands' turn around, I feel we're really good about the channel inventory
Speaker Change: Yeah, I'm the free castor, so we're not gonna guide you know quarters out. There's always so much variability in terms of free cast flow, what happens in each quarter.
Speaker Change: But I will say just kind of reiterate what I said on my prepare remarks, which is, I think we feel really good about where free cash flows coming in on the year relative to what we had had given us as guidance starting to year. At the year, particularly, we're right in line with expectations, even maybe slightly a little bit better. And the change in this quarter, in particular, in terms of the full year, is really about taking that and using that $50 million to reinvest in the business for the benefit of $26. So, again, in line on the overall core fundamentals on free cash flow and feel really good about the trajectory and where it's headed.
Speaker Change: Good to hear. Look forward to Wednesday. Thanks for watching.
Speaker Change: and your next question comes from Simian Seagull with BMO Capital Markets. Your line is open.
Simian Seagull: Thanks, hey, good afternoon everyone.
Simian Seagull: So I was curious, just how to think about your fixed, responsible cost at this point. You're just a huge closer to the revenue and profit improvement.
Simian Seagull: Just think about the putt and take, you've been a really great goce margin. You're working your way to cross savings. The just operating margin is narrowing its gap. Still down. So just trying to think about how to think about ongoing the leverage impacts. Maybe the reinvestment priorities and any other expense pressure points as we walk towards that sales return. Thanks guys.
Speaker Change: Stimieness, such a good question, we're going to answer it on Wednesday. It is a great question, thanks for everything. We'll give you a good glimpse at that on Wednesday.
Speaker Change: Fair enough. All right, look forward to it. Thanks, Jeff. Okay, thank you. But by the way, thank you for the comments on the improvement and we feel same way. We really do feel like we've got good momentum across the P&L.
Speaker Change: Bracken since we did that. Can I throw in and maybe if this is for a little bit, well, just curious, AUR versus UNIS, maybe the past quarter, which made you're more helpful and then how you're thinking about how to do all of it brand. Excuse me, how you're just thinking about that, this revenue.
Speaker Change: Yeah, we usually don't give that level of tail, so I won't now, but we don't plan to do it Wednesday either. But I would say overall I feel good about the Brand Eldation Program we've got internally. I think we're really on the right track. It's going to take time to play out.
Speaker Change: and I mentioned some of the things about OTTW on bands, which is the top end of that, the real tip of the spear. But I think we're on the right path, it's going to take a few years to really get into a full-scale elevation game, but that's where we're headed.
Speaker Change: I would just add one minor thing, which is we are definitely seeing more full price selling in the last quarter, which is encouraging.
Speaker Change: Thank you guys. Appreciate it. Thank you so much. See you Wednesday.
Speaker Change: And your next question comes from Michael Benetti with Evercore, your line is open.
Michael Benetti: and the Wanda Progress. Glad to see it. So I guess since vans in Vans America specifically is a big focus, could you help us understand just so that you're willing to share the channels in America? I know in the past you said D to C would be where we would see the turn for vans.
Speaker Change: First, I think a lot of the POS in the people look after the quarter was certainly worse than down nine that you reported. So I'm just curious if we're getting close to positive on the wholesale side. Is that actually leading D to see at this point? Or maybe just have to think about that. And then I guess stepping back a little more broadly.
Speaker Change: Any examples of how it may be you're willing to share on the evolving conversations with some of your whole field partners. Now that you're starting to see some green shoots with the new product.
Speaker Change: Yeah, first of all we did not say that we thought the TCU turned first in advance, we actually said they were reversed.
Speaker Change: I thought it would probably be. It's a little counterintuitive, I said it would probably turn it wholesale first. Hostel is outperforming.
Speaker Change: DTC right now, which isn't...
Speaker Change: isn't too big as shock when you consider the traffic issue. You know, also, it's continued to have plenty of traffic. We're dependent on generating our own. So it's going to take a little longer to get there. It's the products improved and the pipelines improved. You've got to really clean.
Speaker Change: A clean set of products in the wholesale channel that people are coming in and discovering. And to answer the second question, I think wholesale is overall a really positive feedback on the path we're on with the ants. And I think we'll continue to see improvements so I feel good about it.
Speaker Change: If I could throw in one more, any really samples of how the regional platform is starting to benefit.
Speaker Change: and the day-to-day go to market process at the brands.
Speaker Change: Yeah, I'll repeat the one I gave earlier, but there are other, you know, the key accounts, you know, really in that regional platform, one of the things that we've done historically very well in Emia, and in Argentina, and in APAC.
Speaker Change: and under Martino is we've consistently done a good job of really, really deeply understanding the biggest counts and making sure we're bringing all we can to help them grow and help ourselves grow.
Speaker Change: and we're starting to see that in our top accounts in the Americas and I think you'll see more and more. They'll benefit every account we have, every wholesale account but in the beginning it's going to especially benefit the big ones and it is.
Speaker Change: Okay, thank you.
Speaker Change: And your next question comes from Brooke Roach with Goldman Sachs. Your line is open.
Brooke Roach: Good afternoon and thank you for taking our question. I was hoping we could dive a bit deeper into your expectations for the puts in takes on Grosmargin as we go forward, especially given your cleaner wholesale path, the better full price selling comment that you just gave, but also some of the benefits from product costs.
Brooke Roach: Can you help us understand the magnitude and relative strength of each one of those benefits that we should expect over the course of the next couple of quarters? And what your outlook is for recapturing Matt Gross Prophet Margin? Thank you.
Speaker Change: I mean, we're not getting too much detail on that, I would say.
Speaker Change: As I mentioned, we expect Ross Martino to be up in Q3 and up in Q4.
Speaker Change: Keep in mind we do have some benefit from the actions that we're taking last year in Q3 and Q4. So that will also help in terms of kind of where we're headed.
Speaker Change: Thank you, Bracken. Sorry, boss.
Speaker Change: And your next question comes from Lorraine Hutchinson with Bank of America. Your line is open. Thanks, Good afternoon. I'm hoping to get a little more detail on your view on the North Face North America. Any comments by channel or any reactions you've had from your wholesale partners about how the winter season is progressing.
Speaker Change: Yeah, you know what the little two really say, you know, I'm less from our whole service or our trade partners.
Speaker Change: and more from ourselves. I'd say it can't be anywhere's in last year. It's been like when it really came last year. It seems like it's already kind of here and so far is the U.S. now.
Speaker Change: You know we're sitting here in New York today as you are and it feels a little chilly or a year that it did before. I just came from Canada where it's definitely getting chilly but it always does.
Speaker Change: So I don't know, I'm optimistic. Look, I think we're going to have our...
Speaker Change: Our guide has kind of independent of how severe the weather is or isn't. We've got so many things internally we can fix and to include our go to market structure that I'm confident in what we're guiding here, with or without a good winter or a terrible winter, depending on how you decide to interpret those two hurts.
Speaker Change: But, yeah, so let's just see how it goes, but I think we've got enough in our control right now that Oregon's liver overtelling you.
Bracken: Thank you. Thanks, Bracken.
Speaker Change: And your next question comes from Matthew Boss with JP Morgan, your line is open.
Matthew Boss: Great thanks. So Bracken, maybe just to dig in a bit more on Vans.
Matthew Boss: So maybe just where you stand on some of the reset actions that you had outlined. And then as we think about maybe top priorities over the balance of this year and into next year, how best to measure sequential revenue growth improvements and just the timeline as we think about maybe some of the earlier wins relative to some potential influence on product the sort of momentum and multi-year growth.
Speaker Change: Thanks, thanks Matthew. You know, I think overall in terms of the reset actions, we just cried the reset actions we took in the end of last year were coming up to lapping those as Paul mentioned.
Speaker Change: They're in the rear room here, I mean that's probably as good as some of us like to give you.
Speaker Change: in terms of top priorities going forward for Vance.
Speaker Change: You know, I think if you really laid them out, you know, we've already started a program of introducing new products. It obviously came before Sun got here, but you know, she's already touching everything, you know, and she'll continue to touch everything, every new product, every marketing campaign, you know, she's in the middle of the action.
Speaker Change: Those of you who know her knows she would be, she definitely is
Speaker Change: In terms of time line for an an a level of improvement you could expect quarter quarter you know we're not really gonna provide that but But I'm really excited about it and I think we're on the right path and you can kind of see it and I mentioned it in the opening you know you see some
Speaker Change: So, I'm excitement coming in search and interest in some of the biggest markets around the world now, that's really a change. And so, look, it's early days, but I feel really good about the answer. I'm excited about the brand. I'm excited about sun and the reset stuff in the river, V.M.R.
Matthew Boss: Great, that's the block. Thank you, Matthew.
Speaker Change: And your next question comes from Jay Seoul with UBS, your line is open.
Speaker Change: and I just want to make sure I understand the message of introducing guidance here because I think when the guidance was removed, the messages were not going to give guidance until we know we can give you guidance that we know we can deliver. I think the expectation that the time would be full year guidance. This is quarterly guidance.
Speaker Change: So, is, is, are you saying that like,
Speaker Change: We're sort of at the bottom here, we're in flexion like pink picture, like from here it's somewhere in upward kind of like it happened at Logitech. Or is it more like look, we're giving you a little bit of taste because we have our...
Speaker Change: Visibility to quarters, but there's still more work to do. I'm just to search here as like why this poorly guy, not the full-year guy, and sort of explain how you're thinking through when to introduce the full-year guy. Yeah, let me let me do. I'm a, I'm so glad you asked that question.
Speaker Change: When we were moving guys you described exactly what I said. It's hard to guide, but you don't have real confidence in the numbers that you're looking at internally. I do now.
Speaker Change: So what are you asking the question why are we guiding just one quarter out instead of a year out?
Speaker Change: You know, this is something Paul and I talked about after he got here and Paul had an immediate impact on me.
Speaker Change: He connected to my common sense, which is...
Speaker Change: I don't really think it makes sense of Paul kind of reference that when you describe it.
Speaker Change: for us to try to guide a year when there's nothing magical about a year. You know, a year is just four quarters out. We could guide five quarters out, seven quarters out, nine quarters out, no quarters out.
Speaker Change: So, you know, I think at the end of the day, you know, the most important thing for us is to make sure we're delivering quarter in and quarter out. And that's exactly what we're going to do. So, yeah, so that's our game plan and we'll talk a little more about this on Wednesday.
Speaker Change: Thank you. Thank you. Thank you. Thanks for the question.
Speaker Change: and your next question comes from Paul Loewes with City, your line is open.
Speaker Change: Ben 6, Tracy Cogan, Dylan Inferpal. I'm your doctor mentioned that you expected additional savings beyond a 300 million. And I was wondering if maybe you could claim the magnitude of the savings you see and where these efficiencies might be. And then will you be in reinvesting a similar proportion, like he did with the first round. Thanks.
Speaker Change: You know, Tracy, I hate to say this.
Speaker Change: But we're going to have to wait on the answer to that question until Wednesday. What I would say is, you know, I'm really excited about, I'm really excited about the first round of stages we did. I think we...
Speaker Change: We get a good job of really level setting and removing some of the most gross inefficiencies and taking some of the lowest hang fruit. Anything we do from here is going to be really about a little deeper and more folks on re-engineering to deliver more growth. So we will talk about that Wednesday.
Speaker Change: God, can I just sneak on in about about the worst phase in North America? Was wondering if you saw anything kind of by months as the quarter-pergress that might indicate, you know, why, why you saw the pressure, whether it was weather or something else?
Speaker Change: I wouldn't really say that, I guess, you know, look this is my second year here, so it's hard to end, and it's...
Speaker Change: and Paul's first.
Speaker Change: I don't think we looked at anything by Matthew and said, we see a signal one way or the other. I think things are probably about like we expected them to. And we'll see. Now we're sitting in New York and luckily it feels a little cold in me. So I had to go out and buy Jackie yesterday from the North Face.
Speaker Change: Yeah, we just said, we said in the last quarter that
Speaker Change: You know, given the tough comp on North Face from last year that we expected it to be just slightly down to Quincy from where it was in Q2 and that's exactly where we came in. So not getting into specifics of regions but just holistically, the North Face came in right and right and right with the expected and basically what we had had previewed in the Guard Rels after last quarter.
Speaker Change: God, it thanks very much, guys. Thank you, thanks Tracy.
Speaker Change: And your next question comes from Ike Boracalves, Wells Fargo, your line is open.
Ike Boracalves: Hey guys, let me add my congrats. Two questions which I don't know if you'll answer, but I'm going to try. On the non-core asset field, I know it was never a specific number, but I feel like 50 to 100 million was kind of the thought before, is there just a kind of round-out that's at the 420? I mean, any way you think can kind of just...
Ike Boracalves: and give us the number to help us get there. And then I guess Bracken, the second one is for you just on the portfolio review that you've talked about at length since you started. Are we officially done with that review? Sure, we no longer be asking about, you know, asset divestages or anything, or we just run in the business or is there still potential for something to happen in the foreseeable future?
Bracken Darrell: Thanks. I'll answer the last one real quickly and I'll let Paul answer the person that you know we're officially done for now How's that because you know, I think you're never really done so we'll always be really examining the portfolio and deciding if things fit or not based on there
Paul: No, there's strategic faith, but there are performance and expected performance. So yeah, we're done for now, but we'll keep looking at it. Yeah, and I think what we had said was, we expected about 60 million or so on the asset tells and we did better than that by about 15 million.
Paul: God of thanks.
Speaker Change: Thank you.
Speaker Change: and your next question comes from Jonathan Compton with Beard. Your line is open.
Jonathan Compton: Yeah, thanks, good afternoon.
Jonathan Compton: Bracken, I just want to ask, is you think about third quarter and fourth quarter any more detail on?
Jonathan Compton: sort of they continued sequential improvement or a lot of the decline. And then, if you look at the business broadly, are there parts that are running ahead of what you hope to or does anything come to mind when you think about areas that might be outperforming what you had expected?
Speaker Change: Thank you. Thanks for the question Jonathan. You know, I don't really have anything meaningful to say to you except that I think there's always things that are a little better a little bit worse but overall, things have kind of gone along surprisingly consistent with what we expected in.
Speaker Change: So I think it's very, very consistent and you know, I will not be going to demitialize what the rate of improvements are going forward. I'm excited about the path we're on and I think we're going to continue.
Speaker Change: Great, that looking forward to Wednesday. Thanks. Thanks, we too, thanks, Charles.
Speaker Change: And your next question comes from Jim Duffy with Steephal. Your line is open.
Jim Duffy: Thanks, Good afternoon. Perhaps an area that deserves more attention, Timberland. It sounds like some enthusiasm around the premium booths. Some curious is that global commentary and does that go beyond your collaboration, so you're seeing good, uh, of elevated interest in the old booth franchise.
Speaker Change: Thanks for the question, I just bought yet another pair of yellow boots, maybe that's showing up in the numbers I keep buying more and more.
Speaker Change: Probably a show up again in Q3.
Speaker Change: But yeah, you know, the old bootstint, well, we had this Louis Vuitton collaboration, which was great, you know, about a quarter and a half ago now.
Speaker Change: and you know, we continue to see good solid strength and it is around the world so far so good but we'll stay tuned you know, it's still down right so less down is better than more down but it's still not up so let's keep watching me since the year goes from here.
Speaker Change: Okay, and then another brand where there wasn't a lot of discussion, Dickies
Speaker Change: and just your thoughts there on where you are with respect to stabilization of that business. Thanks. I just love Dickies. I love all our brands, but I really love Dickies because it's...
Speaker Change: It's just a special brand, you know, it's like the art, it's just a cool deep history and...
Speaker Change: It's so old, you know, as a brand yet, you've got 16-year-old kids, where to go surfing or right off the beach anyway.
Speaker Change: and I just, so it's such a cool brand. I say, where are we on the stabilization? I think we're right in the middle of it. You know, we've really reset our strategy and...
Speaker Change: We've got the right level of focus on making sure we're winning at work and then eventually going beyond that.
Speaker Change: I do, I am really excited that we've...
Speaker Change: Yeah, I temporarily took over down there like I did at Vans before Sun came and I've now relinquished my job because Chris Govel has come over from the gap and Chris is a star over there he'll be a star over here he's
Speaker Change: He's not either terrific job as a Joe Manage with the Gap in North America, and he was part of the big turnaround over there, and I think...
Speaker Change: He'll lead the turnaround here on Dickey, so I'm excited about him, but
Speaker Change: We'll see, it's really early. We're definitely at the stabilization period with Indic use getting it back to growths at different story and that's really going to be led by Chris.
Speaker Change: Very good, but toward here and more Wednesday. Thanks. You won't hear too much about Dick you've all went, but because we're going to do all the brand stuff later in the year. So this is going to be very much focused on it. I just did. I had a lot of questions I figured you wouldn't answer till Wednesday anyway. Okay, okay. Well you can feel free to wear it if you wear it. May answer more questions.
Speaker Change: Thank you.
Speaker Change: and your next question comes from Bob Durbow with Guggenheim, your line is open.
Bob Durbow: Hi, Bracken. Hey, Paul. Let's get two questions. The first one is, can you expand some more just on what you're seeing by brand in China, sort of, you know, last quarter, sort of current trends in China and then?
Bob Durbow: Second question is just on inventory, you know, down 13 against the...
Bob Durbow: Minus one to minus three looking forward.
Bob Durbow: Is that how we should expect, you know, like when you look at where your inventory levels are sort of across the company?
Speaker Change: Is that how you plan to run inventory going forward or is there more ad max that you need as you sort of resume towards revenue growth? Well, let me come back to let me ask that last one first and then we'll take the China question up.
Speaker Change: No, bro, I would say.
Speaker Change: In the last call, I think I said, you know...
Speaker Change: We're like at a hundred and 55 days of inventory or something. And I said, I think we still have room down from there, but that's actually not a bad number. It's a pretty good number, but I think we can bring it down further from there over time. But we'll have to change what we operate to get there. So there's internal work that's going to be required to get us down further than that. But over time, I bet that we'll end up lower than that.
Speaker Change: On Um...
Speaker Change: And so I don't think there's some reason why we have our own story so I'm going to go back up. I don't think that's going to happen if anything will come down.
Speaker Change: on China. You know, overall, you know, you're reading the same things we are on China, you know, we're not.
Speaker Change: We're so much in our control that I'm not too worried about Macron Barments, but it is true that the Macron China's little softer than it has been.
Speaker Change: of the North Face is really the highlight. It continues to be strong. That long-term secular trend seems to be in here for the long-term and secular.
Speaker Change: and we're excited about it and it's by far the biggest business in China now.
Speaker Change: It's probably not where it's talking too much about the rest of the businesses there. They're in various state, you know, bands isn't a, isn't, is really in the turnaround mode there. And, you know, the rest of the brands are falling in different places. But I'd probably focus on North-Stays for now until we really bring you more info.
Speaker Change: Thank you. Thank you.
Speaker Change: And your next question comes from Dana Tellevi with Tellevi Advisory Group. Your line is open.
Dana Tellevi: I get afternoon, Bracken, and Paul, as you think about the freak cashable a guide and so it's provided an expansion in terms of...
Dana Tellevi: What's changed within the guidance by Brand, or geography?
Dana Tellevi: and then with the improvement that you've seen in the brands performance, how much of it do you think was specific product that helped drive that? How much of it was the easy comparisons or what you're seeing in any of the industry segments? Thank you.
Speaker Change: I'll turn it into the last and first on a let Paul not answer the second of the first sort of it's because it's kind of a hard one answer. I think it turns into that.
Speaker Change: The various brands of where they are, I think it's a combination of things. I do think we've got a better and better and it'll get progressively better. Set of products coming out over time. In some cases, the compares are easier. They're going to particularly be easy as we get in three and four in a couple of places like brands.
Speaker Change: but overall it's an integrated.
Speaker Change: Saying, we've got channel changes, we've reduced the amount of value of channel for example in bands. It took us in the wrong direction. They're a quarter, about two quarters ago, three quarters ago.
Speaker Change: and I would say in each element of the...
Speaker Change: The business, you know, if you went through the five piece of marketing, each element has changes and those changes will progressively work their way through the total business over the next year or two.
Speaker Change: I apologize to you who are particularly short-term trying to figure out how to gauge each one of those in their impact on a quarter where I can tell you is when they're synchronized they have a bigger impact and they're getting more and more synchronized across each of these brands with a real either growth plan transformation plan or something. We'll talk a little bit more about that on Wednesday but I feel good about the...
Speaker Change: The overall path we're on, although I don't think it could really parse out exactly what contribution each one of those is making to the current members.
Speaker Change: Yeah, I think Bracken Puckett, we were never going to let level detail on Frickaslow, but thank you.
Speaker Change: Thank you. Thank you so much. Thank you, Danny.
Speaker Change: and your next question comes from Janine Stitcher with BTIG, your line is open.
Speaker Change: Hey, you've got Ethan Saggy on 3rd Janine, thanks for taking my question. I was just wondering what do you think in terms of the promotional environment at both fans in the north face? As well in the overall industry, just heading into the holiday season, thanks.
Speaker Change: Well, I don't know how to say except if it looks better the last year, you know, which is great, you know?
Speaker Change: We're just sitting on a lot of inventory last year and we're sitting on a list this year so that's good and our retail partner wholesale partners are too Other than that I wouldn't have much to say about it. I mean we're as Paul alluded to we're doing more for full price selling which we like doesn't mean we're without promotion we're not But but it is better
Speaker Change: God, thank you. Thank you.
Speaker Change: And your final question comes from John Kernan with TD Cowan. Your line is open.
John Kernan: Alright, thanks for squeezing me in. Draw the castle important.
John Kernan: How would you characterize Ben internationally versus the metric, obviously? In your opinion, this is for PF, is now larger. It's comfortably larger than the domestic business with a consolidated company in just curious when you look at Ben.
John Kernan: Ow!
John Kernan: and San Francisco, the United States.
Speaker Change: Well, I probably go there deeper, which is not that deep, however, but what I would say is I think bands is underdeveloped internationally, you know, I think
Speaker Change: I felt that before I got here, I feel that now that I am here. But that's an easy thing to say in a much harder thing than luck. So, you know, this is part of the opportunity. I think we really have a company. How do we get really strong growth around the world? But...
Speaker Change: I would not underestimate how much opportunity we have within the US. I mean, that might be our single big stuff side right now, you know, if we can...
Speaker Change: really get ourselves into the position where we're back to where we ought to be in the Americas. We have a lot of growth opportunity there. So we've got opportunity and both the international businesses.
Speaker Change: Parts of our business and particularly US business. So I'm really excited about, so one thing to excited about the company.
Speaker Change #100: John, it was a great question. More to more color on.
John Kernan: Okay good. Hey, I'm one of them.
John Kernan: Well, I will bring this to the club because it does sound like we're kind of at the end of our
Speaker Change #101: Our program, I want to thank all of you for attending this call, but I especially want to thank you in advance for listening to the next one or continuing the next one. This will be the first investor day that Paul and I have had together and actually all of our leadership teams have together.
Speaker Change #101: We're excited to share with you kind of what our game plan is. I think our transformations on track. We've made a lot of progress against the state of priorities we've had, and we'll have some new info for you on Wednesday too, so don't miss it.
Speaker Change #102: And ladies and gentlemen, this concludes today's conference call and we thank you for your participation. You may now disconnect.
Speaker Change #102: The