Q1 2027 V F Corp Earnings Call

July 29, 2026

Speaker #1: Gentleman, thank you for joining us, and welcome to the VF Corporation first quarter 2027 earnings call. After today's prepared remarks, we will host a question-and-answer session.

Operator: Ladies and gentlemen, thank you for joining us and welcome to the VF Corporation Q1 2027 earnings call. After today's prepared remarks, we will host a question and answer session. If you would like to ask a question, please raise your hand. If you have dialed into today's call, please press star nine to raise your hand and star six to unmute. I will now hand the conference over to Allegra Perry, Vice President of Investor Relations. Please go ahead.

Speaker #1: If you would like to ask a question, please raise your hand. If you have dialed into today's call, please press star 9 to raise your hand and star 6 to unmute.

Speaker #1: I will now hand the conference over to Allegra Perry, Vice President of Investor Relations. Please go ahead.

Speaker #2: Hello everyone. Thank you for joining us on VF Corporation's first quarter fiscal 2027 conference call. On our call today, we will make forward-looking statements.

Allegra Perry: Hello, everyone. Thank you for joining us on VF Corporation's Q1 fiscal 2027 conference call. On our call today, we 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 we say otherwise, amounts that are referred to on today's call are all on an adjusted, constant dollar, continuing operations, and excluding Dickies basis, which we've defined in the presentation that we posted this morning on our investor relations website. We use those lead numbers in our discussion as we believe they more accurately represent the true operational performance and underlying results of our business. We may also refer to reported amounts, which are in accordance with US GAAP.

Speaker #1: Welcome to the V F Corp Q1 2027 earnings call. After today's prepared remarks, we will host a question-and-answer session. If you would like to ask a question, please raise your hand.

Speaker #2: 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.

Speaker #1: If you have dialed into today's call, please press *9 to raise your hand and *6 to unmute. I will now hand the conference over to Allegra Perry, Vice President of Investor Relations.

Speaker #2: Unless we say otherwise, amounts that are referred to on today's call are all on an adjusted, constant dollar, continuing operations, and excluding Dickey's basis, which we've defined in the presentation that we posted this morning on our investor relations website.

Speaker #1: Please go ahead.

Speaker #2: Hello, everyone. Thank you for joining us on V F Corp's Q1 2027 conference call. On our call today, we 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.

Speaker #2: We use those lead numbers in our discussion as we believe they more accurately represent the true operational performance and underlying results of our business.

Speaker #2: These uncertainties are detailed in documents filed regularly with the SEC. Unless we say otherwise, amounts that are referred to on today's call are all on an adjusted, constant dollar, continuing operations, and excluding Dickey's basis, which we've defined in the presentation that we posted this morning on our investor relations website.

Speaker #2: We may also refer to reported amounts, which are in accordance with US GAAP. Reconciliations of GAAP measures to adjusted amounts are found in the supplemental financial tables included in the presentation, where we identify and qualify all excluded items and provide management's view of why this information is useful to investors.

Allegra Perry: Reconciliations of GAAP measures to adjusted amounts are found in the supplemental financial tables included in the presentation, where we identify and qualify all excluded items and provide management's view of why this information is useful to investors. Before we proceed, I want to highlight that scripted remarks have been posted at the start of the earnings call for ease of reference during the call. The scripted remarks will be removed after the earnings transcript is made available on our investor relations website. Joining me on today's call are VF's President and Chief Executive Officer, Bracken Darrell; Chief Financial Officer, Paul Vogel; and Chief Operating Officer, Abhishek Dalmia. Following our prepared remarks, we'll open the call for your questions. I'll now hand it over to Bracken.

Speaker #2: Before we proceed, I want to highlight that scripted remarks have been posted at the start of the earnings call for ease of reference during the call.

Speaker #2: We use those lead numbers in our discussion, as we believe they more accurately represent the true operational performance and underlying results of our business.

Speaker #2: The scripted remarks will be removed after the earnings transcript is made available on our investor relations website. Joining me on today's call are VF's President and Chief Executive Officer Bracken Daryl, Chief Financial Officer Paul Vogel, and Chief Operating Officer Abhishek Damya.

Speaker #2: Following our prepared remarks, we'll open the call for your questions. I'll now hand it over to Bracken.

Speaker #2: Before we proceed, I want to highlight that scripted remarks have been posted at the start of the earnings call for ease of reference during the call.

Speaker #3: Thank you, Allegra. Hello everyone, and thank you for joining us. Before we get into our call for the quarter, let me talk about our CFO transition.

Bracken Darrell: Thank you, Allegra. Hello, everyone, and thank you for joining us. Before we get into our call for the quarter, let me talk about our CFO transition. As you know, if you read our release this morning, Paul Vogel will be stepping down, Abhishek Dalmia will be taking on the newly combined role of Chief Financial Officer and Chief Operating Officer. Let me start with Paul. I'm so thankful to Paul for being my partner these past two years. He's played a key role in dramatically improving our balance sheet, lowering our cost base, and returning us to growth. Paul should be very proud of his accomplishments, I know he is. He's also been a good friend and partner to me and the entire team, we're going to all miss him. Paul, I know you want to say a few words.

Speaker #2: The scripted remarks will be removed after the earnings transcript is made available on our investor relations website. Joining me on today's call are VF's President and Chief Executive Officer Bracken Darrell, Chief Financial Officer Paul Vogel, and Chief Operating Officer Abhishek Damia.

Speaker #3: As you know, if you read our release this morning, Paul Vogel will be stepping down, and Abhishek Damya will be taking on the newly combined role of Chief Financial Officer and Chief Operating Officer.

Speaker #3: Let me start with Paul. I'm so thankful to Paul for being my partner these past 2 years. He's played a key role in dramatically improving our balance sheet, lowering our cost base, and returning us to growth.

Speaker #2: Following our prepared remarks, we'll open the call for your questions. I'll now hand it over to Bracken.

Speaker #3: Thank you, Allegra. Hello, everyone, and thank you for joining us. Before we get into our call for the quarter, let me talk about our CFO transition.

Speaker #3: Paul should be very proud of his accomplishments and I know he is. He's also been a good friend and partner to me and the entire team, and we're going to all miss him.

Speaker #3: As you know, if you read our release this morning, Paul Vogel will be stepping down, and Abhishek Damia will be taking on the newly combined role of Chief Financial Officer and Chief Operating Officer.

Speaker #3: Paul, I know you want to say a few words.

Speaker #4: Great. Thanks, Bracken. As Bracken shared, after a lot of reflection over the past several months, we decided it's the right time to transition my role.

Paul Vogel: Thanks, Bracken. As Bracken shared, after a lot of reflection over the past several months, we decided it's the right time to transition my role. Over the past two years, I've become very passionate about the brands within VF, and I've been driven to execute on the transformational work underway across the company. That work has required a significant amount of time away from my family, who have remained on the East Coast. As I looked ahead and discussed with Bracken the ongoing expectations, we decided now would be the right time for VF to transition to a new CFO. I remain confident in the company, the strategy, the progress we are making. In fact, I leave this role with great confidence in where VF is headed. Over the past two years, we've made meaningful progress, stronger financial discipline, improved execution, a significant reduction in debt, and a sharpened portfolio.

Speaker #4: Over the past 2 years, I've become very passionate about the brands within VF, and I've been driven to execute on the transformational work underway across the company.

Speaker #4: That work has required a significant amount of time away from my family who have remained on the East Coast. As I looked ahead and discussed with Bracken the ongoing expectations, we decided now would be the right time for VF to transition to a new CFO.

Speaker #3: Paul should be very proud of his accomplishments and I know he is. He's also been a good friend and partner to me and the entire team, and we're going to all miss him.

Speaker #3: Paul, I know you want to say a few words.

Speaker #4: Great, thanks, Bracken. As Bracken shared, after a lot of reflection over the past several months, we decided it's the right time to transition my role.

Speaker #4: I remain confident in the company. The strategy and the progress we are making. In fact, I leave this role with great confidence in where VF is headed.

Speaker #4: Over the past 2 years, we've made meaningful progress, stronger financial discipline, improved execution, and significant reduction in debt, and a sharpened portfolio. We return to growth for the full year in fiscal 26 for the first time in 3 years, expanded margins materially, and reduced the leverage ratio by 2 full turns in 2 years.

Speaker #4: Over the past two years, I've become very passionate about the brands within VF, and I've been driven to execute on the transformational work underway across the company.

Speaker #4: That work has required a significant amount of time away from my family, who have remained on the East Coast. As I looked ahead and discussed with Bracken the ongoing expectations, we decided now would be the right time for VF to transition to a new CFO.

Paul Vogel: We returned to growth for the full year in FY26 for the first time in three years, expanded margins materially, and reduced the leverage ratio by two full turns in two years. I'm confident we will hit our previously provided guidance for the medium term. I'm also very pleased that Abhishek will be stepping into the CFO role, combining with his current remit as COO. He understands the transformation agenda, he understands the operating model, and he brings a powerful combination of strategic, operational, and financial perspective. I believe he is the right leader for this role and the right partner for Bracken and the leadership team in this next phase. On a personal note, Abhishek has been a true partner to me, and we've become real good friends and had a lot of fun working together.

Speaker #4: And I'm confident we will hit our previously provided guidance for the medium term. I'm also very pleased that Abhishek will be stepping into the CFO role, combining it with his current remit as COO.

Speaker #4: I remain confident in the company, the strategy, and the progress we are making. In fact, I leave this role with great confidence in where VF is headed.

Speaker #4: He understands the transformation agenda, he understands the operating model, and he brings a powerful combination of strategic operational and financial perspective. I believe he is the right leader for this role and the right partner for Bracken and the leadership team in this next phase.

Speaker #4: Over the past two years, we've made meaningful progress: stronger financial discipline, improved execution, a significant reduction in debt, and a sharpened portfolio. We returned to growth for the full year in fiscal '26 for the first time in three years, expanded margins materially, and reduced the leverage ratio by two full turns in two years.

Speaker #4: On a personal note, Abhishek has been a true partner to me, and we've become real good friends and had a lot of fun working together.

Speaker #4: Over the next quarter, I will work with Abhishek to help ensure a smooth and thoughtful transition, and I'm committed to doing everything I can to support the team during this period.

Paul Vogel: Over the next quarter, I will work with Abhishek to help ensure a smooth and thoughtful transition, and I'm committed to doing everything I can to support the team during this period. Last, I want to say thank you. First, thank you to Bracken, for his partnership, trust, and leadership. It's been a privilege to work alongside him during such an important period for VF. Thank you to the board and the broader leadership team for their support and collaboration. Thank you to our shareholders and analysts. Most of all, thank you to the finance organization and to the teams across VF. Serving as CFO of VF has been an honor. I'm proud of the progress we have made. I'm confident in the company's future. Now I'll turn it back over to Bracken.

Speaker #4: And last, I want to say thank you first, thank you to Bracken, for his partnership, trust, and leadership. It's been a privilege to work alongside him during such an important period for VF.

Speaker #4: Thank you to the board and the broader leadership team for their support and collaboration. Thank you to our shareholders and analysts, and most of all, thank you to the finance organization and to the teams across VF.

Speaker #4: On a personal note, Abhishek has been a true partner to me, and we've become really good friends and had a lot of fun working together.

Speaker #4: Serving as CFO of VF has been an honor. I'm proud of the progress we have made, and I'm confident in the company's future. And now I'll turn it back over to Bracken.

Speaker #4: Over the next quarter, I will work with Abhishek to help ensure a smooth and thoughtful transition, and I'm committed to doing everything I can to support the team during this period.

Speaker #3: Thank you, Paul. And thank you, Paul. I want to put direct I want to put to rest any rumors there might be about the suspicious coincidence of Paul's move back to Philadelphia and LeBron James' move to Philadelphia in '76ers.

Bracken Darrell: Thank you, Paul. I want to put to rest any rumors there might be about the suspicious coincidence that Paul's move back to Philadelphia and LeBron James moved to Philadelphia and the 76ers. They seem to be uncoordinated, although we'll try to confirm that over time. Now for Abhishek. We are really fortunate to have one of the most knowledgeable and impactful people in our industry as COO. After stints at Dell and Lululemon, and I didn't mention GE in the beginning of his career, Abhishek spent seven years at BCG working with almost every major company in our industry on a very wide range of projects. That has already paid big dividends at VF as he has reengineered, first our technology organization, then supply chain, and soon finance. He's also been a partner for me in our strategy and execution across the business.

Speaker #4: And last, I want to say thank you first. Thank you to Bracken for his partnership, trust, and leadership. It's been a privilege to work alongside him during such an important period for VF.

Speaker #4: Thank you to the Board and the broader leadership team for their support and collaboration. Thank you to our shareholders and analysts, and most of all, thank you to the Finance organization and to the teams across VF.

Speaker #3: They seem to be uncoordinated, although we'll try to confirm that over time. now for Abhishek. We are really fortunate to have one of the most knowledgeable and impactful people in our industry as COO.

Speaker #4: Serving as CFO of VF has been an honor. I'm proud of the progress we have made, and I'm confident in the company's future. And now I'll turn it back over to Bracken.

Speaker #3: After stints at Dell and Lululemon, and I didn't mention GE in the beginning of his career, Abhishek spent 7 years at BCG working with almost every major company in our industry on a very wide range of projects.

Speaker #3: Thank you, Paul. And thank you, Paul. I want to put to rest any, any rumors there might be about the suspicious coincidence of Paul's move back to Philadelphia and LeBron James' move to Philadelphia and the 76ers.

Speaker #3: And that has already paid big dividends at VF. As he has re-engineered first our technology organization, then supply chain, and soon finance. He's also been a partner for me in our strategy and execution across the business.

Speaker #3: He's a particularly good fit for the CFO role as an expansion of his current role. You'll soon see, though, he's not going to be a COO who just adds finance.

Bracken Darrell: He's a particularly good fit for the CFO role as an expansion of his current role. You'll soon see, though, he's not going to be a COO who just adds finance. He will be a CFO who really understands at a practical level how to create total shareholder value. He deeply understands brand value creation. The combination of these roles will drive sustainable and profitable growth, agility, and cost efficiency. As the business evolves into the next phase of growth, his ability to blend financial acumen with change management and transformative thinking will be just the right cocktail for VF's ongoing transformation, as we continue on our way to becoming a high-performing, high-growth business. Abhishek, I know you'd like to say a few words.

Speaker #3: After stints at Dell and Lululemon—and I didn't mention GE at the beginning of his career—Abhishek spent seven years at BCG, working with almost every major company in our industry on a very wide range of projects.

Speaker #3: He will be a CFO who really understands that a practical level how to create total shareholder value. He deeply understands brand value creation. And the combination of these roles will drive sustainable and profitable growth, agility, and cost efficiency.

Speaker #3: And then, as already paid, big dividends at VF. As he has re-engineered first our technology organization, then supply chain, and soon finance. He's also been a partner for me in our strategy and execution good fit for the CFO role as an expansion of his current role.

Speaker #3: As the business evolves in the next phase of growth, his ability to blend financial acumen with change management and transformative thinking will be just the right cocktail for VF's ongoing transformation as we continue on our way to becoming a high-performing, high-growth business.

Speaker #3: You'll soon see, though, he's not going to be a COO who just adds finance. He will be a CFO who really understands at a practical level how to create total shareholder value.

Speaker #3: Abhishek, I know you'd like to say a few words.

Speaker #5: Hello everyone. thank you, Bracken, for your confidence and for the opportunity to take on this expanded role. I'm honored by the trust you and the board have placed in me.

Abhishek Dalmia: Hello, everyone. Thank you, Bracken, for your confidence and for the opportunity to take on this expanded role. I'm honored by the trust you and the board have placed in me. I also want to thank Paul for his partnership and friendship. He has helped guide VF through an important period of transformation and has developed strong finance leaders. I look forward to partnering with this talented team as we enter our next phase. I chose to join VF a few years ago because I love our brands and I believe in the long-term potential and success of this company. Going forward, my commitment is to ensure that every dollar of capital is deployed where it creates the greatest long-term value. That means maintaining discipline in how we invest, strengthening returns across our portfolio, and balancing growth, profitability, and cash generation to deliver sustainable TSR.

Speaker #3: He deeply understands brand value creation. And the combination of these roles will drive sustainable and profitable growth, agility, and cost efficiency. As the business evolves in the next phase of growth, his ability to blend financial acumen with change management and transformative thinking will be just the right cocktail for VF's ongoing transformation, as we continue on our way to becoming a high-performing, high-growth business.

Speaker #5: I also want to thank Paul for his partnership and friendship. He has helped guide VF through an important period of transformation. And has developed strong finance leaders.

Speaker #5: I look forward to partnering with this talented team as we enter our next phase. I chose to join VF a few years ago because I love our brands, and I believe in the long-term potential and success of this company.

Speaker #3: Abhishek, I know you'd like to say a few words.

Speaker #5: Hello, everyone. Thank you, Bracken, for your confidence and for the opportunity to take on this expanded role. I'm honored by the trust you and the board have placed in me.

Speaker #5: Going forward, my commitment is to ensure that every dollar of capital is deployed where it creates the greatest long-term value. That means maintaining discipline, in how we invest, strengthening returns across our portfolio, and balancing growth, profitability, and cash generation to deliver sustainable TSR.

Speaker #5: I also want to thank Paul for his partnership and friendship. He has helped guide VF through an important period of transformation, and has developed strong finance leaders.

Speaker #5: I'm energized by what lies ahead in this next phase, as I continue to work closely with Bracken and key leaders in brands and commercial to make VF a high-performing and a highly profitable growth business.

Abhishek Dalmia: I'm energized by what lies ahead in this next phase, as I continue to work closely with Bracken and key leaders in brands and commercial to make VF a high-performing and a highly profitable growth business. Now back to you, Bracken.

Speaker #5: Now back to you, Bracken.

Speaker #3: Thanks, Abhishek. Now let's talk about the quarter that just ended. The first quarter was a solid start to the year. As a result of this start, and better visibility into the rest of the year, we're raising our full-year fiscal 27 outlook from 1 to 2% growth to 2% or better.

Bracken Darrell: Thanks, Abhishek. Let's talk about the quarter that just ended. The First quarter was a solid start to the year. As a result of this start and better visibility into the rest of the year, we're raising our full-year fiscal year 2027 outlook from 1% to 2% growth to 2% or better. When we guided last quarter, we said you could expect another year of growth. Now you can expect a year of acceleration, albeit modest so far, but this is just the beginning of that. First quarter revenue is flat to last year, ahead of our guide. Q1 is typically a negative operating income quarter, but Q1 operating income was also slightly better than we expected, even though we invested in growth across multiple dimensions. Turning to the individual brands. The North Face grew 4% in Q1.

Speaker #3: We guided last quarter, we said you could expect another year of growth. Now you can expect a year of acceleration. Albeit modest so far.

Speaker #3: But this is just the beginning of that. First quarter revenue is flat to last year, ahead of our guide. Q1 is typically a negative operating income quarter, but Q1 operating income was also slightly better than we expected, even though we invested in growth across multiple dimensions.

Speaker #5: Now, back to you, Bracken.

Speaker #3: Thanks, Abhishek. Now, let's talk about the quarter that just ended. The first quarter was a solid start to the year. As a result of this start and better visibility into the rest of the year, we're raising our full-year fiscal '27 outlook from 1% to 2% growth to 2% or better.

Speaker #3: Turning to the individual brands. The North Face grew 4% in Q1. That was stronger than our expectations of a flat quarter when we that we shared with you earlier.

Bracken Darrell: That was stronger than our expectations of a flat quarter that we shared with you earlier. You might recall that the primary driver of our flat quarter expectation was orders that would normally have occurred in Q1 actually shipped in Q4 last year. We expected the stronger Q4 would result in a lighter Q1. As in the past this year, we have timing shifts across the quarters. In that vein, we expect Q2 to be flattish versus last year on The North Face. However, we expect the full year to be roughly in line with last year's growth rate. Let me repeat that. We expect the full year to be roughly in line with last year's growth rate.

Speaker #3: We guided last quarter, we said you could expect another year of growth. Now you can expect a year of acceleration. Albeit modest so far.

Speaker #3: You might recall that the primary driver of our flat quarter expectation was orders that were norm would normally have occurred in Q1 actually shift in Q4 last year.

Speaker #3: So we expected a stronger Q4 would result in a lighter Q1. As in the past, this year, we have timing shifts across the quarters.

Speaker #3: In that vein, we expect Q2 to be flat versus last year on North Face. However, we expect the full year to be roughly in line with last year's growth rate.

Speaker #3: Turning to the individual brands, the North Face grew 4% in Q1. That was stronger than our expectations of a flat quarter when we that we shared with you earlier.

Speaker #3: Let me repeat that. We expect the full year to be roughly in line with last year's growth rate. For a product standpoint, the North Face growth was led by transitional outerwear, shells, and equipment.

Speaker #3: You might recall that the primary driver of our flat quarter expectation was orders that were norm would normally have occurred in Q1 actually shift in Q4 last year.

Bracken Darrell: From a product standpoint, The North Face growth was led by transitional outerwear, shells, and equipment, and we barely tapped the many opportunities to bring in strong spring and summer categories in the years ahead that we don't do much in today, which makes a solid quarter like this even more satisfying. Imagine what it'll be when our assortment in stores and online is much broader and appropriate for warmer seasons. In footwear, the Ultima ST Version Two, which I've actually been wearing all week, I've been wearing the 500, is absolutely amazing. We launched it during the quarter with a very strong debut across regions. Now let me give you a little taste of what's coming for The North Face in Q3 and Q4, looking into the back half of the year.

Speaker #3: And we barely tapped the many opportunities to bring in strong spring and summer categories in the years ahead that we that we don't do much in today.

Speaker #3: So we expected a stronger Q4 would result in a lighter Q1. As in the past, this year we have timing shifts across the quarters.

Speaker #3: Which makes a solid quarter like this even more satisfying. Imagine what it'll be when our assortment in stores and online is much broader and appropriate for warmer seasons.

Speaker #3: In that vein, we expect Q2 to be flattish versus last year on The North Face. However, we expect the full year to be roughly in line with last year's growth rate.

Speaker #3: Let me repeat that. We expect the full year to be roughly in line with last year's growth rate. From a product standpoint, The North Face growth was led by transitional outerwear, shells, and equipment.

Speaker #3: In footwear, the Ultimasa version 2, which I've actually been wearing all week, I've been wearing the 500, is absolutely amazing. We launched it during the quarter with a very strong debut across regions.

Speaker #3: And we barely tapped the many opportunities to bring in strong spring and summer categories in the years ahead that we don't do much in today.

Speaker #3: Now let me give you a little taste of what's coming for the North Face in Q3 and Q4, looking into the back half of the year.

Speaker #3: As I mentioned last quarter, the North Face is the exclusive performance apparel sponsor for the US ski and snowboard team. The athletes will wear our product across all major events, including World Cups and, of course, the Olympic Winter Games.

Speaker #3: Which makes a solid quarter like this even more satisfying. Imagine what it will be when our assortment in stores and online is much broader and appropriate for warmer seasons.

Bracken Darrell: As I mentioned last quarter, The North Face is the exclusive performance apparel sponsor for the U.S. Ski & Snowboard Team. The athletes will wear our product across all major events, including World Cups and, of course, the Olympic Winter Games and official training camps between now through 2034 and beyond, we hope. The first drop of the U.S. Ski & Snowboard apparel is this winter. I'm wearing one of the T-shirts underneath this shirt right now. We'll be upgrading our largest single icon, the Nuptse, from Summit Series all the way down through all of our lifestyle. This one has an innovation twist as well, which we will share with you later. From a marketing standpoint, there's also something very exciting coming out. We can't tell you exactly what it is, but keep an eye out for your local IMAX theater. Just watch for developments ahead.

Speaker #3: And official training camps between now and through 19 2034 and beyond, we hope. The first drop of the US ski and snowboard apparel is this winter.

Speaker #3: Now, let me give you a little taste of what's coming for The North Face in Q3 and Q4, looking into the back half of the year.

Speaker #3: I'm wearing one of the T-shirts underneath this shirt right now. We'll be upgrading our largest single icon, the Nupsey, from Summit Series all the way down through all of our lifestyle.

Speaker #3: This one has an innovation twist as well, which we'll share with you later. From a marketing standpoint, there's also there's also something very exciting coming out.

Speaker #3: We can't tell you exactly what it is, but keep an eye out for your local IMAX theater. Just watch for developments ahead. Timberland revenue is up 3% in the quarter.

Speaker #3: And official training camps between now and through 19 2034 and beyond, we hope. The first drop of the US ski and snowboard apparel is this winter.

Bracken Darrell: Timberland revenue was up 3% in the quarter. Both DTC and wholesale grew on a global basis. While regional performance was driven by continued strong growth in the Americas, up 10%. As expected, at this stage, the 6-Inch Premium Boot is the growth engine. While behind the scenes, our initiatives to build and diversify around this strength are taking hold. Outside of the boot, shoes continue to perform strongly in all regions, led by the boat shoe. As we get into fall 2026 season and beyond, you'll begin to see more of the new product lineups being developed, from below the ankle to sneakers and footwear, and across apparel. Alongside those product initiatives, we continue to develop the brand distribution network.

Speaker #3: Both DTC and wholesale grew on a global basis. While regional performance was driven by continued strong growth in the Americas, up 10%. As expected, at this stage, the 6-inch premium boot was the growth engine, while behind the scenes, our initiatives to build and diversify around this strength are taking hold.

Speaker #3: I'm wearing one of the T-shirts underneath this shirt right now. We'll be upgrading our largest single icon, the Nuptse, from Summit Series all the way down through all of our lifestyle.

Speaker #3: This one has an innovation twist as well, which we'll share with you later. From a marketing standpoint, there's also something very exciting coming out.

Speaker #3: Outside of the boot, shoes continue to perform strongly in all regions, led by the boat shoe. As we get into the fall 26 season and beyond, you'll begin to see more of the new product lineups being developed, from below the ankle to sneakers and footwear and across apparel.

Speaker #3: We can't tell you exactly what it is, but keep an eye out for your local IMAX theater. Just watch for developments ahead. Timberland revenue is up 3% in the quarter.

Speaker #3: Both DTC and wholesale grew on a global basis, while regional performance was driven by continued strong growth in the Americas, up 10%. As expected at this stage, the 6-inch premium boot was the growth engine, while behind the scenes our initiatives to build and diversify around this strength are taking hold.

Speaker #3: Alongside those product initiatives, we continue to develop the brand distribution network. And for the first quarter, we opened three new full-price DTC stores in the Americas.

Bracken Darrell: For the first quarter, we opened three new full-price DTC stores in the Americas, taking the total number of full-price stores to 14 in the region, and there are more to come. We're driving brand energy with our social-first marketing strategy, as we've talked about before, while leveraging the brand's cultural relevance. Search interest was up in all key markets. The brand continues to play a central role in big cultural moments. For example, during the quarter, the yellow boot became a symbol of New York during the New York Knicks magical championship run this year, and an associated social media post generated the brand's highest engagement ever. We expect another good year of growth for Timberland as we continue to take steps to unlock the true potential of Timberland over the next few years. Let's talk about Vans.

Speaker #3: Taking the total number of full-price stores to 14 in the region. And they're more to come. We're driving brand energy with our social-first marketing strategy as we've talked about before, while leveraging the brand's cultural relevance.

Speaker #3: Outside of the boot, shoes continue to perform strongly in all regions, led by the boat shoe. As we get into the fall '26 season and beyond, you'll begin to see more of the new product lineups being developed, from below the ankle to sneakers and footwear and across apparel.

Speaker #3: Search interest was up in all key markets. The brand continues to play a central role in big cultural moments. For example, during the quarter, the yellow boot became a symbol of New York during the New York's magical New York Knicks championship run this year, and an associated social media post generated the brand's highest engagement ever.

Speaker #3: Alongside those product initiatives, we continue to develop the brand distribution network. For the first quarter, we opened three new full-price DTC stores in the Americas.

Speaker #3: Taking the total number of full-price stores to 14 in the region, and there are more to come. We're driving brand energy with our social-first marketing strategy, as we've talked about before, while leveraging the brand's cultural relevance.

Speaker #3: We expect another good year of growth for Timberland as we continue to take steps to unlock the true potential of Timberland over the next few years.

Speaker #3: Now let's talk about vans. Q1 revenue is down globally by 9% year over year. We expect a similar trend in Q2. We began signaling a few quarters ago that business would turn around first in DTC, then wholesale.

Speaker #3: Search interest was up in all key markets. The brand continues to play a central role in big cultural moments. For example, during the quarter, the yellow boot became a symbol of New York during the Knicks' magical championship run this year, and an associated social media post generated the brand's highest engagement ever.

Bracken Darrell: Q1 revenue is down globally by 9% year-over-year. We expect a similar trend in Q2. We began signaling a few quarters ago the business would turn around first in DTC, then wholesale, and we focused on the Americas. That's exactly what continues to happen. We expect it to be a little bit better in Q1 than we were, but this quarter doesn't at all change our indication of what we see for the full year. To that end, let me start by giving you a little more data than you've had before on our DTC. I'm going to focus on the US, where half our business is, but the strategy is the same globally. Remember, we have more flexibility in introducing new products into our own DTC channels than we do in wholesale.

Speaker #3: And we focused on the Americas. And that's exactly what continues to happen. We expect to be a little bit better in Q1 than we were.

Speaker #3: We expected to be a little bit better in Q1 than we were, but this quarter doesn't at all change our indication of what we see for the full year.

Speaker #3: We expect another good year of growth for Timberland as we continue to take steps to unlock the true potential of Timberland over the next few years.

Speaker #3: To that end, let me start by giving you a little more data than you've had before on our DTC. I'm going to focus on the US, where half our business is.

Speaker #3: Now let's talk about vans. Q1 revenue is down globally by 9% year over year. We expect a similar trend in Q2. We began signaling a few quarters ago the business would turn around first in DTC, then wholesale, and we focused on the Americas.

Speaker #3: But the strategy is the same globally. Remember, we have more flexibility in introducing new products into our own DTC channels than we do in wholesale, just takes more time.

Bracken Darrell: Just takes more time. E-com is where we're starting to see accelerated growth. Let me talk about our fleet of stores focused on the US, where most are. Almost 60% of our comp stores are now flat to growing in Q1. There are stubborn stores we continue to work on, but you can see that their e-com and the majority of our fleet is now positive in the US. What's going to change between the H1 of fiscal 2027 and the H2 of fiscal 2027 at Vans? In addition to the improvement we've seen in e-com in our stores, wholesale is going to be a lot better around the world. We're confident because we have much better visibility into our wholesale partners' plans. This is one of the things that gives me confidence to commit to a better H2 for Vans.

Speaker #3: E-com is where we're starting to see accelerated growth. Now let me talk about our fleet of stores, focused on the US where most are.

Speaker #3: And that's exactly what continues to happen. We expect to be a little bit better in Q1 than we were. We expect it to be a little bit better in Q1 than we were, but this quarter doesn't at all change our indication of what we see for the full year.

Speaker #3: Almost 60% of our comp stores are now flat to growing in Q1. There are stubborn stores we continue to work on, but you can see what our e-com that there are e-com and the majority of our fleet is now positive in the US.

Speaker #3: To that end, let me start by giving you a little more data than you've had before on our DTC. I'm going to focus on the US, where half our business is.

Speaker #3: But the strategy is the same globally. Remember, we have more flexibility in introducing new products into our own DTC channels than we do in wholesale, just takes more time.

Speaker #3: So what's going to change change between the first half of fiscal 27 and the second half of fiscal 27 at vans? In addition to the improvement we've seen in e-com in our stores, wholesale is going to be a lot better around the world.

Speaker #3: E-commerce is where we're starting to see accelerated growth. Now, let me talk about our fleet of stores, focused on the US, where most are.

Speaker #3: We're confident because we have much better visibility into our wholesale partners' plans. This is one of the things that gives me confidence to commit to a better second half of vans.

Speaker #3: In fact, for vans as a whole, while the first half revenue will be down about 9% versus last year, we expect second half to be down 2% or better versus last year.

Bracken Darrell: In fact, for Vans as a whole, while their H1 revenue will be down about 9% versus last year, we expect the H2 to be down 2% or better versus last year. Let me go further on Vans. There have been many green shoots in the past few months. DTC in the Americas continues to grow, as I said. We have more and more new products that are generating energy, excitement, engagement, and sell-out, complete sell-out. The press and social media analysts have published many headlines like, "Vans hot streak is only getting hotter," and "Vans might just be the footwear brand of the year." The brand is even inspiring luxury brands like Louis Vuitton, Prada, Dior, and Miu Miu as they see the energy move to Vans silhouettes.

Speaker #3: So, what's going to change between the first half of fiscal '27 and the second half of fiscal '27 at Vans? In addition to the improvement we've seen in e-comm in our stores, wholesale is going to be a lot better around the world.

Speaker #3: Let me go further on vans now. There have been many green shoots in the past few months. DTC in the Americas continues to grow, as I've said.

Speaker #3: We have more and more new products that are generating energy. Excitement, engagement, and sell-out, complete sell-out. The press and social media analysts have published many headlines like "Vans hot streak is only getting hotter" and "Vans might just be the footwear brand of the year." The brand is even inspiring luxury brands, like Louis Vuitton, Prada, Dior, and Miu Miu, as they see the energy move to vans silhouettes.

Speaker #3: In fact, for vans as a whole, while the first half revenue will be down about 9% versus last year, we expect second half to be down 2% or better versus last year.

Speaker #3: Let me go further on vans now. There have been many green shoots in the past few months. DTC in the Americas continues to grow, as I've said.

Speaker #3: And speaking of brand energy, in just its second year, the vans work tour will have almost 600,000 attendees across its six venues. Making it the for sure the largest rock festival in North America and maybe the maybe tied or one or two or three for the largest music festival in North America.

Bracken Darrell: Speaking of brand energy, in just its second year, the Vans Warped Tour will have almost 600,000 attendees across its six venues, making it for sure the largest rock festival in North America, and maybe tied or one of two or three for the largest music festival in North America. When you go, you see two out of every three people wearing Vans. Our focus on innovation is driving consumer demand. We continue to reinvigorate the original icons. Authentic had another double-digit quarter. Slip-ons grew. Old Skool continues to benefit from pearlized, distressed, and collabs like the Travis Barker collab, all resonating and achieving a very high sell-through. The latest example, just last week, was a souvenir asphalt collection, which is Old Skool, which sold out in 30 minutes. The team is also putting out powerful new silhouettes like loafers and others.

Speaker #3: And when you go you see two out of every three people wearing vans. Our focus on innovation is driving consumer demand. We continue to reinvigorate the original icons.

Speaker #3: Authentic had another double-digit quarter. Slip-ons grew. Old school continues to benefit from pearlized, distressed, and collabs like the Travis Barker collab, all resonating and achieving a very high sell-through.

Speaker #3: And speaking of brand energy, in just its second year, the vans work tour will have almost 600,000 attendees across its six venues. Making it the for sure the largest rock festival in in North America and maybe the maybe tied or one or two or three for the largest music festival in North America.

Speaker #3: The latest example just last week was a souvenir asphalt collection, which is old school, which sold out in 30 minutes. The team is also putting out powerful new silhouettes, like loafers and others.

Speaker #3: And when you go, you see two out of every three people wearing Vans. Our focus on innovation is driving consumer demand. We continue to reinvigorate the original icons.

Speaker #3: One of the things we're under-leveraging is some of this incredible energy we're creating. We can do a better job of having sufficient volumes of those hot styles in our in of our icons and entirely new silhouettes to better capitalize on demand.

Bracken Darrell: One of the things we're under-leveraging is some of this incredible energy we're creating. We can do a better job of having sufficient volumes of those hot styles of our icons and entirely new silhouettes to better capitalize on demand. We're working on that. Overall, our energy strategy in our DTC channels is starting to work, and we're going to keep going and build on this. Wholesalers will be bringing in more new product as we approach the holiday season and into the spring. We continue to be very optimistic on Vans. Beyond the top three brands, we're fueling the engines that are showing strong potential among the smaller brands, and there are a growing number of those. Altra is the most visible example. Altra continues to deliver, building on a strong performance last year and progressing towards another year of powerful growth.

Speaker #3: Authentic had another double-digit quarter. Slip-Ons grew. Old Skool continues to benefit from pearlized, distressed, and collabs like the Travis Barker collab, all resonating and achieving a very high sell-through.

Speaker #3: We're working on that. But overall, our energy strategy and our DT channels is starting to work, and we're going to keep going and build on this.

Speaker #3: Wholesalers will be bringing in more new product as we approach the holiday season and into the spring. We continue to be very optimistic on vans.

Speaker #3: One of the things we're under-leveraging is some of this incredible energy we're creating. We can do a better job of having sufficient volumes of those hot styles in our in in icon of our icons and entirely new silhouettes to better capitalize on demand.

Speaker #3: Beyond the top three brands, we're fueling the engines that are showing strong potential among the smaller brands. And there are a growing number of those.

Speaker #3: Ultra is the most visible example. Ultra continues to deliver, building on a strong performance last year and progressing towards another year of powerful growth.

Speaker #3: We're working on that. But overall, our energy strategy and our DT channels is starting to work, and we're going to keep going and build on this.

Speaker #3: Franchise styles, including Lone Peak, Torin, the experience flow, and Wild, continue to perform well. We're continuing to invest in brand awareness, which remains low but is growing.

Bracken Darrell: Franchise styles including Lone Peak, Torin, Experience Flow, and Experience Wild continue to perform well. We're continuing to invest in brand awareness, which remains low but is growing. Altra plays in a very large addressable market. For perspective, we're a leader in trail running, but road running is 10 times as large of a market. Even though we've only recently gotten seriously into road running, over the past few quarters, road running has become larger for Altra than trail running for the brand. As I've said before, we believe this brand will be a billion-dollar-plus brand over time. To conclude, I'm confident about the year, and we're raising our full-year guidance as a result of our better visibility into the second half and our Q1 performance. With that, I'll hand it to Paul first for more financial depth on this quarter, and then Abhishek for the forward-looking guidance for the next.

Speaker #3: Wholesalers will be bringing in more new product as we approach the holiday season and into the spring. We continue to be very optimistic on vans.

Speaker #3: Ultra plays in a very large addressable market. For perspective, we're a leader in trail running, but road running is 10 times as large of a market.

Speaker #3: Beyond the top three brands, we're fueling the engines that are showing strong potential among the smaller brands, and there are a growing number of those.

Speaker #3: Ultra is the most visible example. Ultra continues to deliver, building on a strong performance last year and progressing towards another year of powerful growth.

Speaker #3: Even though we've only recently gotten seriously into road running, over the past few quarters, road running has become larger for Ultra than trail running for the brand.

Speaker #3: Franchise styles, including Lone Peak, Torin, the Experience Flow, and Wild, continue to perform. Awareness remains low but is growing. Ultra plays in a very large addressable market.

Speaker #3: As I've said before, we believe this brand will be a billion-dollar-plus brand over time. To conclude, I'm confident about the year, and we're raising our full-year guidance as a result of our better visibility into the second half and our Q1 performance.

Speaker #3: For perspective, we're a leader in trail running, but road running is ten times as large of a market. Even though we've only recently gotten seriously into road running, over the past few quarters, road running has become larger for Ultra than trail running for the brand.

Speaker #3: With that, I'll hand it to Paul first for more financial depth on this quarter, and then Avicek for the forward-looking guidance for the next.

Bracken Darrell: With that, I'll hand it to Paul first for more financial depth on this quarter, and then Abhishek for the forward-looking guidance for the next.

Speaker #3: Paul.

Speaker #1: Great. Thank you, Bracken. Turning to our first quarter results. Q1 revenue was approximately $1.7 billion. Flat year over year and above our guidance of down low single digits.

Bracken Darrell: Paul?

Paul Vogel: Great. Thank you, Bracken. Turning to our Q1 results. Q1 revenue was approximately $1.7 billion, flat year-over-year and above our guidance of down low single digits. Operating performance was slightly ahead of guidance. By brand, as Bracken said, The North Face grew 4%, Vans was down 9%, and Timberland was up 3%. In Q1, Timberland's growth was impacted by the ongoing conflict in the Middle East, as well as ongoing work with one of our distributors. This was roughly three points impact to Timberland in Q1. From a regional perspective, growth in the Americas was up 4%, while EMEA was down 7% and APAC was down 1%. Lastly, by channel, DTC led us up 5%, while wholesale was down year-over-year at -4%. Adjusted gross margin for the quarter was 54.9%, up slightly over last year.

Speaker #3: As I've said before, we believe this brand will be a billion-dollar-plus brand over time. To conclude, I'm confident about the year and we're raising our full-year guidance as a result of our better visibility into the second half and our Q1 performance.

Speaker #1: And operating performance was slightly ahead of guidance. By brand, as Bracken said, the North Face grew 4%. Vans was down 9%. And Timberland was up 3%.

Speaker #3: With that, I'll hand it to Paul first for more financial depth on this quarter, and then to Abhishek for the forward-looking guidance for the next.

Speaker #1: In Q1, Timberland's growth was impacted by the ongoing conflict in the Middle East, as well as ongoing work with one of our distributors. This was roughly three points impacted to Timberland in Q1.

Speaker #3: Paul.

Speaker #1: Great. Thank you, Bracken. Turning to our first quarter results, Q1 revenue was approximately $1.7 billion, flat year-over-year and above our guidance of down low single digits.

Speaker #1: From a regional perspective, growth in the Americas was up 4%, while MA was down 7 and APAC was up was down 1%. And lastly, by channel, DTC led us up 5%, while wholesale was down year over year at minus 4%.

Speaker #1: And operating performance was slightly ahead of guidance. By brand, as Bracken said, The North Face grew 4%, Vans was down 9%, and Timberland was up 3%.

Speaker #1: Adjuster gross margin for the quarter was 54.9%, up slightly over last year. Our core underlying gross margin is actually stronger than it appears, as this quarter's margin was impacted by 140 basis points as a result of unfavorable effects.

Paul Vogel: Our core underlying gross margin is actually stronger than it appears, as this quarter's margin was impacted by 140 basis points as a result of unfavorable FX. As a reminder, there was roughly no incremental advantage or disadvantage of tariffs in Q1 this year versus Q1 last year. SG&A stepped up year over year as we deliberately invested in the business to drive growth. As we signaled in May, we are making H1 investments in brand-building initiatives. The $225 million of structural SG&A savings since fiscal 2024 remain in the run rate. This has been a choice to reinvest on a lower fixed base to drive growth. Our Q1 adjusted operating loss for the quarter was $95 million, slightly ahead of guidance as a result of the higher-than-expected top line. Adjusted loss per share was $0.27 versus $0.25 in Q1 of last year.

Speaker #1: As a reminder, there's roughly no incremental advantage or disadvantage of tariffs in Q1 this year versus Q1 last year. SG&A stepped up year over year as we deliberately invested in the business to drive growth.

Speaker #1: From a regional perspective, growth in the Americas was up 4%, while EMEA was down 7%, and APAC was down 1%. And lastly, by channel, DTC led us, up 5%, while wholesale was down year over year at minus 4%.

Speaker #1: As we signaled in May, we are making first half investments in brand building initiatives. The $225 million of structural SG&A savings since fiscal 2024 remain in the run rate.

Speaker #1: This has been a choice to reinvest on a lower fixed base to drive growth. Our Q1 adjusted operating loss for the quarter was $95 million, slightly ahead of guidance as a result of the higher than expected top line.

Speaker #1: Finally, adjusted loss per share was $27 versus $25 in Q1 of last year. The tax rate was approximately 11% in Q1, and there is no change to our full-year outlook for the tax rate in the low 30s.

Paul Vogel: The tax rate was approximately 11% in Q1. There is no change to our full-year outlook for the tax rate in the low 30s. On the balance sheet, we continue to strengthen our position. Inventories, excluding Dickies and FX, were down 4%, and net debt was down $1.1 billion, or down 20% versus last year. Free cash flow was up approximately $75 million in Q1 year over year. This includes approximately $50 million benefit from tariff refunds. I'll now turn the call over to Abhishek, who will walk you through our guidance for Q2 and the full year. Abhishek?

Speaker #1: As we signaled in May, we are making first-half investments in brand-building initiatives. The $225 million of structural SG&A savings since fiscal 2024 remain in the run rate.

Speaker #1: On the balance sheet, we continue to strengthen our position. Inventories, including Dickies and FX, were down 4%, and net debt was down 1.1 billion or down 20% versus last year.

Speaker #1: Free cash flow was up approximately 75 million in Q1 year over year. This includes approximately $50 million benefit from tariff refunds. I'll now turn the call over to Avicek, who will walk you through our guidance for Q2 and the full year.

Speaker #1: Avicek.

Speaker #2: Thank you, Paul. For full year fiscal 27, let me start with key metrics. First, on revenue, we had guided to up 1% to 2%, and now expect to be up 2% or better versus last year.

Abhishek Dalmia: Thank you, Paul. For full year fiscal 2027, let me start with key metrics. First, on revenue, we had guided to up 1% to 2% and now expect to be up 2% or better versus last year. Second, we continue to expect our operating margin to be approximately 8% for the full year. Third, we expect free cash flow to be flat to up versus last year, with operating cash flow up year over year. As a quick reminder, this excludes any potential net benefit from tariff refunds during fiscal 2027. This also excludes the $100 million net impact of the pension termination that we received in fiscal 2026. Finally, we continue to expect our year-end leverage ratio to be between 2.6 and 2.9x. As you know, it's not our standard practice to give you detailed brand guidance.

Speaker #1: On the balance sheet, we continue to strengthen our position. Inventory, excluding Dickies and FX, is down 4%. And net debt was down $1.1 billion, or down 20% versus last year.

Speaker #2: Second, we continue to expect our operating margin to be approximately 8% for the full year. Third, we expect free cash flow to be flat to up versus last year, with operating cash flow up over year over year.

Speaker #1: Pre-cash flow was up approximately $75 million in Q1 year over year. This includes approximately $50 million benefit from tariff refunds. I'll now turn the call over to Abhishek, who will walk you through our guidance for Q2 and the full year.

Speaker #1: Abhishek.

Speaker #2: Thank you, Paul. For full year fiscal 27, let me start with key metrics. First, on revenue, we had guided to up 1% to 2%, and now expect to be up 2% or better versus last year.

Speaker #2: As a quick reminder, this excludes any potential net benefit from tariff refunds during fiscal 27. This also excludes the $100 million net impact of the pension termination that we received in fiscal 26.

Speaker #2: And finally, we continue to expect our year-end leverage ratio to be between 2.6 and 2.9x. As you know, it's not our standard practice to give you detailed brand guidance, but given we just raised our revenue guidance, we want to give you some additional color on the top three brands for the full year.

Abhishek Dalmia: Given we just raised our revenue guidance, we want to give you some additional color on the top three brands for the full year. For The North Face and Timberland, we expect the full year to be in line with their respective growth rates from last year, plus or minus a point or two on either side. For Vans, we continue to expect revenue trends to improve relative to last fiscal year, down mid-single digits. As you heard from Bracken, we expect better trends in the H2 and expect revenue to be -2% or better for Q3 and Q4 combined. Let me share some details on the Q2 now. Revenue growth will be approximately in line with Q1. Operating income will be broadly in line with last year. Let me break down the key components for you.

Speaker #2: As a quick reminder, this excludes any tariff refunds during fiscal 27. This also excludes the $100 million net impact of the pension termination that we received in fiscal 26.

Speaker #2: For the North Face and Timberland, we expect the full year to be in line with their respective growth rates from last year. Plus or minus a point or two on either side.

Speaker #2: For Vans, we continue to expect revenue trends to improve relative to last fiscal year, down mid single digits. As you heard from Bracken, we expect better trends in the second half and expect revenue to be minus 2% or better for Q3 and Q4 combined.

Speaker #2: Let me share some details on the second quarter now. Revenue growth will approximately in line with Q1, and operating income will be broadly in line with last year.

Speaker #2: For the North Face and Timberland, we expect the full year to be in line with their respective growth rates from last year. Plus or minus a point or two on either side.

Speaker #2: For vans, we continue to expect revenue trends to improve relative to last fiscal year, down mid single digits. As you heard from Bracken, we expect better trends in the second half and expect revenue to be minus 2% or better for Q3 and Q4 second quarter now.

Speaker #2: Let me break down the key components for you. For our two largest brands, the North Face will be flat to slightly up year over year in Q2, and as mentioned before, this is primarily driven by wholesale timing.

Abhishek Dalmia: For our two largest brands, The North Face will be flat to slightly up year-over-year in Q2. As mentioned before, this is primarily driven by wholesale timing. Vans Q2 performance will be similar to Q1 of down 9%. Within this number, America's DTC will continue to grow, as we indicated in May, with continued improvement in DTC for other regions. As you also heard from Bracken, we expect the wholesale business to improve in H2, resulting the brand delivering a mid-single-digit decline for the full year. We expect gross margin to be up versus last year. On SG&A, as you heard from Paul, we continue to make brand-building investments, specifically in DTC and marketing, that will impact the overall SG&A in Q2 year-over-year. These Q2 gross margin and SG&A movements are contemplated within our full-year operating margin guidance of approximately 8%.

Speaker #2: Vans Q2 performance will be similar to Q1 of down 9%. Within this number, Americas DTC will continue to grow as we indicated in May, with continued improvement in DTC for other regions.

Speaker #2: Revenue growth will approximately in line with Q1, and operating income will be broadly in line with last year. Let me break down the key components for you.

Speaker #2: As you also heard from Bracken, we expect the wholesale business to improve in the second half. Resulting the brand delivering a mid single digit decline for the full year.

Speaker #2: For our two largest brands, The North Face will be flat to slightly up year-over-year in Q2, and as mentioned before, this is primarily driven by wholesale timing.

Speaker #2: We expect gross margin to be up versus last year. On SG&A, as you heard from Paul, we continue to make brand building investments specifically in DTC and marketing that will impact the overall SG&A in Q2 year over year.

Speaker #2: Vans' Q2 performance will be similar to Q1, down 9%. Within this number, Americas DTC will continue to grow as we indicated in May, with continued improvement in DTC for other regions.

Speaker #2: These Q2 gross margin and SG&A movements are contemplated within our full year operating margin guidance of approximately 8%. Finally, Bracken, Paul, and I have been working very closely over the last few years on VF's transformation.

Speaker #2: As you also heard from Bracken, we expect the wholesale business to improve in the second half, resulting in the brand delivering a mid-single-digit decline for the full year.

Abhishek Dalmia: Finally, Bracken, Paul, and I have been working very closely over the last few years on VF's transformation. We are on track to achieve our medium-term targets. Let me remind them. First, an operating margin exit run rate of at least 10% in fiscal 2028. As we clarified on our last call, it really means that we'll be 10% or better for full year 2029. Second, a leverage ratio of 2.5 times or better by fiscal 2028. To conclude, we beat our Q1 expectations and raised our full-year revenue guidance. We gave you a little more of the runway on Vans for rest of the fiscal year and also additional color for The North Face and Timberland for the full year. We confirmed our guidance on operating margin, free cash flow, and leverage, and have clear line of sight to our medium-term targets.

Speaker #2: We expect gross margin to be up versus last year. On SG&A, as you heard from Paul, we continue to make brand building investments specifically in DTC and marketing.

Speaker #2: We are on track to achieve our medium-term targets. Let me remind them. First, an operating margin exit run rate of at least 10% in fiscal 2028.

Speaker #2: That will impact the overall SG&A in Q2 year over year. These Q2 gross margin and SG&A movements are contemplated within our full-year operating margin guidance of approximately 8%.

Speaker #2: As we clarified on our last call, it really means that we'll be 10% or better for full year 29. And second, a leverage ratio of 2.5 times or better by fiscal 28.

Speaker #2: Finally, Bracken, Paul, and I have been working very closely over the last few years on VF's transformation. We are on track to achieve our medium-term targets.

Speaker #2: So to conclude, we beat our first quarter expectations and raised our full year revenue guidance. We gave you a little more of the runway on Vans for rest of the fiscal year, and also additional color for the North Face and Timberland for the full year.

Speaker #2: Let me remind them. First, an operating margin exit run rate of at least 10% in fiscal 2028. As we clarified on our last call, it really means that we'll be 10% or better for full year 29, and second, a leverage ratio of 2.5 times or better by fiscal 28.

Speaker #2: We confirmed our guidance on operating margin, free cash flow, and leverage, and have clear line of sight to our medium-term targets. We are well on our way to becoming a high-performing, high-growth business, and with that, I will hand it back to our operator for your questions.

Abhishek Dalmia: We are well on our way to becoming a high-performing, high-growth business. With that, I will hand it back to our operator for your questions. Thank you.

Speaker #2: So, to conclude, we beat our first quarter expectations and raised our full-year revenue guidance. We gave you a little more of the runway on Vans for the rest of the fiscal year, and also additional color for The North Face and Timberland for the full year.

Speaker #2: Thank you.

Speaker #3: We will now begin the question and answer session. Kindly limit yourself to one question per person. If you would like to ask a question, please raise your hand using the raise hand function at the bottom of your screen.

Operator: We will now begin the question and answer session. Kindly limit yourself to one question per person. If you would like to ask a question, please raise your hand using the raise hand function at the bottom of your screen. If you have dialed into today's call, please press star nine to raise your hand and star six to unmute. Please stand by while we compile the Q&A roster. Your first question comes from the line of Brooke Roach with Goldman Sachs. Your line is open. Please go ahead.

Speaker #3: If you have dialed into today's call, please press star 9 to raise your hand and star 6 to unmute. Please stand by while we compile the Q&A roster.

Speaker #3: Your first question comes from the line of Brooke Roach with Goldman Sachs. Your line is open. Please go ahead.

Speaker #2: Thank you.

Speaker #4: Good morning, and thank you for taking our question. Hi, Bracken. Hi, Paul. Hi, Avicek. Paul, best of luck in your next chapter, and Avicek, congratulations on the expanded role.

Brooke Roach: Good morning. Thank you for taking our question. Hi, Bracken. Hi, Paul. Hi, Abhishek. Paul, best of luck in your next chapter, and Abhishek, congratulations on the expanded role. I was hoping we could unpack the trends that you're seeing in Americas wholesale at the Vans brand this quarter. Bracken, I think you mentioned in your prepared remarks that you were hoping to be a little bit better than where you were. Can you unpack what transpired in the quarter versus your expectations? Also give us a little bit more color on what gives you confidence in the improvement and the magnitude of the improvement that you're expecting to see into the back half. Perhaps you could give us a little bit of color on what you're seeing in the order book by geography and the types of products that are driving that inflection.

Speaker #3: If you have dialed into today's call, please press *9 to raise your hand and *6 to unmute. Please stand by while we compile the Q&A roster.

Speaker #4: I was hoping we could unpack the trends that you're seeing in Americas wholesale at the Vans brand this quarter. Bracken, I think you mentioned you're prepared remarks that you were hoping to be a little bit better than where you were.

Speaker #4: Can you unpack what transpired in the quarter versus your expectations? And then also give us a little bit more color on what gives you confidence in the improvement and the magnitude of the improvement that you're expecting to see into the back half, perhaps you could give us a little bit of color on what you're seeing in the order book by geography and the types of products that are driving that inflection.

Speaker #3: Your first question comes from the line of Brooke Roach with Goldman Sachs. Your line is open. Please go ahead.

Speaker #4: Good morning, and thank you for taking our question. Hi, Bracken. Hi, Paul. Hi, Abhishek. Paul, best of luck in your next chapter, and Abhishek, congratulations on the expanded role.

Speaker #4: I was hoping we could unpack the trends that you're seeing in Americas wholesale at the Vans brand this quarter. Bracken, I think you mentioned in your prepared remarks that you were hoping to be a little bit better than where you were.

Speaker #4: Thank you so much.

Brooke Roach: Thank you so much.

Speaker #5: Thank you, Brooke, and it's good to hear from you. Yes, I'll go right into all those questions. So first, in terms of our performance in Vans in North America, you know, we've been saying for a while that DTC is going to turn first in the wholesale will follow, and that's exactly what's happening, exactly what happened in Q2.

Bracken Darrell: Thank you, Brooke. It's good to hear from you. Yes, I'll go right into all those questions. First, in terms of our performance in Vans in North America. We've been saying for a while that DTC is going to turn first and that wholesale will follow, and that's exactly what's happening, exactly what happened in Q2. Our wholesale business continues to be a lot weaker. If you look at our global number, I'll step up to the global number. If you look at that global number for the quarter, if we were telling you we delivered 9% down overall, it was a lot better than that in our DTC globally and a lot worse than that in the wholesale globally. I'm talking a lot worse. Now, our sell-out is not that bad in wholesale, so the actual sell-out's better.

Speaker #5: Our wholesale business continues to be a lot weaker. I mean, if you look at our global number, I'll step up to the global number.

Speaker #4: Perhaps you could give us a little bit of color on what you're seeing in the order book by geography and the types of products that are driving that inflection.

Speaker #5: If you look at that global number for the year, if we're, you know, for the quarter, if we were telling you we delivered 9% down overall, it was a lot better than that in our DTC globally.

Speaker #4: Thank you so much.

Speaker #1: Thank you, Brooke, and it's good to hear from you. Yes, I'll go right into all those questions. So first, in terms of our performance in vans in North America, you know, we've been saying for a while that DTC is going to turn first in the wholesale will follow, and that's exactly what's happening, exactly what happened in Q2.

Speaker #5: And a lot worse than that in the wholesale globally. And I'm talking a lot worse. Now, our sellout is not that bad in wholesale.

Speaker #5: So the actual sellout's better. There's some destocking that's going on, probably ahead of buying in new inventory. In terms of what are they buying, you know, one of the cool things about having your own DTC, and that is most dramatic for us in Vans in the Americas, is the fact that we have a shorter path to market, and we can be very choiceful about what we put out there.

Bracken Darrell: There's some destocking that's going on, probably ahead of buying in new inventory. In terms of what are they buying? One of the cool things about having your own DTC, that is most dramatic for us in Vans in the Americas, is the fact that we have a shorter path to market, and we can be very choiceful about what we put out there. If you go into our stores or certainly if you go online, you'll see a lot of new products from us now. I hope you can see that when you walk in our stores, but you can certainly see it online, I encourage you to do it today. Those are selling very well. As I said in the script in the beginning, they're not in wholesale in anywhere near the same volumes as they are in DTC. That's coming.

Speaker #1: Our wholesale business continues to be a lot weaker. I mean, if you look at our global number—I'll step up to the global number.

Speaker #1: If you look at that global number for the year, if we're, you know, our fourth quarter, if you're, if we were telling you we delivered 9% or down overall, it was a lot better than that in our DTC globally.

Speaker #5: So if you go into our stores or certainly if you go online, you'll see a lot of new products from us now. I hope you can see that when you walk into our stores, but you can certainly see it online and I encourage you to do it today.

Speaker #1: And a lot worse than that in the wholesale globally. And I'm talking a lot worse. Now, our sellout is not that bad in wholesale.

Speaker #1: So the actual sellout's better. There's some destocking that's going on, probably ahead of buying in new inventory. In terms of what are they buying, you know, one of the cool things about having your own DTC—and that's most dramatic for us in Vans in the Americas—is the fact that we have a shorter path to market, and we can be very choiceful about what we put out there.

Speaker #5: Those are selling, you know, those are selling very well. As I said in the script in the beginning, they're not in they're not in wholesale in anywhere near the same volumes as they are in DTC.

Speaker #5: So that's coming. Why do we have confidence in wholesale improving as we go in the back half of the year? Both in the Americas and around the world, because we have you mentioned order books.

Bracken Darrell: Why do we have confidence in wholesale improving as we go in the back half of the year, both in the Americas and around the world? You mentioned order books. I'm not going to specifically go into order books, I will say, the discussions we're having with our wholesale partners around the world indicate that we're going to have a strong turn in wholesale in the back half.

Speaker #5: I'm not going to I'm not going to specifically go into order books, but I will say the discussions we're having with our wholesale partners around the world indicate that we're going to have a strong turn in wholesale in the back half.

Speaker #1: So if you go into our stores or certainly if you go online, you'll see a lot of new products from us now. I hope you can see that when you walk into our stores, we can certainly see it online.

Speaker #1: I encourage you to do it today. Those are selling—you know, those are selling very well. As I said in the script in the beginning, they're not in wholesale in anywhere near the same volumes as they are in DTC.

Speaker #4: Great. Thank you so much. I'll pass it on.

[Analyst]: Great. Thank you so much. I'll pass it on.

Brooke Roach: Great. Thank you so much. I'll pass it on.

Speaker #3: Your next question comes from the line of Adrian Yee with Barclays. Your line is open. Please go ahead.

Operator: Your next question comes from the line of Adrienne Yih with Barclays. Your line is open. Please go ahead.

Speaker #1: So that's coming. Why do we have confidence in wholesale improving as we go into the back half of the year—both in the Americas and around the world? Because we have—you mentioned—order books.

Speaker #6: Good morning. Thank you for taking my questions. And congratulations to Avicek and Paul. Thanks for the partnership. It's been really wonderful working with you.

Adrienne Yih: Good morning. Thank you for taking my questions, and congratulations to Abhishek, and Paul, thanks for the partnership. It's been really wonderful working with you. Bracken, it's very clear that global luxury is kind of picking up some cues from some of your key styles, the Authentic, the Slip-On, and skate-inspired. It's pretty flattering, your prices really haven't changed over time, I'm wondering how you think about materially building on this emerging brand moment. What do you do in that competitive atmosphere? Is that an upside opportunity for the back half? Also on this 8% operating margin, Paul and Abhishek, can you talk about the upside and downside risks? You're putting a lot of SG&A into the operating margin. Could you pull back on that, or is this really about upside selling in the back half? Thank you.

Speaker #1: I'm not going to—I'm not going to specifically go into order books, but I will say the discussions we're having with our wholesale partners around the world indicate that we're going to have a strong turn in wholesale in the back half.

Speaker #6: So Bracken, you had talked about I mean, it's very clear that global luxury is kind of picking up some cues from some of your key styles: the authentic, the slip-on, and skate-inspired.

Speaker #4: Great. Thank you so much. I'll pass it on.

Speaker #6: So it's pretty flattering, but your prices really haven't changed over time. And I'm wondering how you think about kind of materially building on this emerging brand moment?

Speaker #3: Your next question comes from the line of Adrian Yee with Barclays. Your line is open. Please go ahead.

Speaker #5: Good morning. Thank you for taking my questions. And congratulations to Abhishek and Paul. Thanks for the partnership. It's been really wonderful working with you.

Speaker #6: What do you do kind of in that competitive excuse me, competitive atmosphere? And is that an upside opportunity for the back half? Also, on this 8% operating margin, Paul and Avicek, can you talk about kind of the upside and downside risks?

Speaker #5: So, Bracken, you had talked about—I mean, it's very clear that global luxury is kind of picking up some cues from some of your key styles: the Authentic, the Slip-On, and skate-inspired.

Speaker #6: You're putting a lot of SG&A into kind of the operating margin. Could you pull back on that, or is this really about kind of upside selling in the back half?

Speaker #5: So it's pretty flattering, but your prices really haven't changed over time. And I'm wondering how you think about kind of materially building on this emerging brand moment?

Speaker #6: Thank you.

Speaker #5: Okay. I'm going to take the first, and then I'm going to let Avicek answer the second one, since it's a forward-looking comment. You know, in terms of you know, you know, one of the things I love about coming into this company and it makes me so excited to walk in here every day is the fact that we serve you know, millions and maybe even hundreds of millions of consumers as opposed to a fraction of the Earth, which is what luxury is doing.

Bracken Darrell: Okay. I'm going to take the first one, then I'm going to let Abhishek answer the second one since it's a forward-looking comment. One of the things I love about coming into this company, and it makes me so excited to walk in here every day, is the fact that we serve millions and maybe even hundreds of millions of consumers as opposed to a fraction of the Earth, which is what luxury is doing. It's wonderful, though, to be viewed as potentially competing with luxury, because they sell at 10 to 20 times our prices. You're right. This is a moment where luxury is going into a lot of our silhouettes, an increasing number of our silhouettes, and that is not only flattering, but it's very good for the brand and brand heat. Now, how do we take advantage of that?

Bracken Darrell: Okay. I'm going to take the first one, then I'm going to let Abhishek answer the second one since it's a forward-looking comment. One of the things I love about coming into this company, and it makes me so excited to walk in here every day, is the fact that we serve millions and maybe even hundreds of millions of consumers as opposed to a fraction of the Earth, which is what luxury is doing. It's wonderful, though, to be viewed as potentially competing with luxury, because they sell at 10 to 20x our prices. You're right. This is a moment where luxury is going into a lot of our silhouettes, an increasing number of our silhouettes, and that is not only flattering, but it's very good for the brand and brand heat. Now, how do we take advantage of that?

Speaker #5: What do you do, kind of in that competitive—excuse me, competitive—atmosphere? And is that an upside opportunity for the back half? Also, on this 8% operating margin, Paul and Abhishek, can you talk about the upside and downside risks?

Speaker #5: You're putting a lot of SG&A into the operating margin. Could you pull back on that, or is this really about upside selling in the back half?

Speaker #5: And it's wonderful, though, to be viewed as potentially competing with luxury, because they sell at 10 to 20 times our prices. So you're right.

Speaker #5: Thank you.

Speaker #1: Okay. I'm going to take the first, and then I'm going to let Abhishek answer the second one, since it's a forward-looking comment. You know, in terms of, you know, I, you know, one of the things I love about coming into this company and it makes me so excited to walk in here every day is the fact that we serve millions and maybe even hundreds of millions of consumers as opposed to a fraction of the Earth, which is what luxury is doing.

Speaker #5: This is a moment where luxury is going into a lot of our silhouettes and increasing number of our silhouettes. And that is not only flattering, but it's very good for the brand and brand heat.

Speaker #5: Now, how do we take advantage of that? So far, as you said, we have not raised price. We don't have a plan to raise price this year.

Bracken Darrell: Far, as you said, we have not raised price. We don't have a plan to raise price this year. It's certainly always an option. What we really are doing, though, is trying to move our mix a little higher. You'll see us emphasize more premium styles, not only collaborations, but in our own premium styles, and then make sure we're delivering growth. We got in this. We're back here. This business is very sensitive to growth. As we start to grow on Vans, you're going to see the profitability will expand rapidly as we know. There's a lot of leverage there. Now, Abhishek, you want to take a second?

Speaker #5: That's certainly always an option. What we really are doing, though, is trying to move our mix a little higher. So you'll see us emphasize more premium styles, not only collaborations, but in our own premium styles.

Speaker #1: And it's wonderful, though, to be viewed as potentially competing with luxury, because they sell at 10 to 20 times our prices. So you're right.

Speaker #5: And then make sure we're delivering growth. You know, we got in this we're back here. This is a very this business is very sensitive to growth.

Speaker #1: This is a moment where luxury is going into a lot of our silhouettes and increasing number of our silhouettes. And that is not only flattering, but it's very good for the brand and brand heat.

Speaker #5: So as we start to grow on Vans, you're going to see the profitability will expand rapidly as we know. So there's a lot of leverage there.

Speaker #1: Now, how do we take advantage of that? So far, as you said, we have not raised prices. We don't have a plan to raise prices this year.

Speaker #5: Now, Avicek, you want to take a second?

Speaker #2: Sure. First of all, Adrian, thank you for the warm welcome. And I do look forward to working with you as well. To your question, first up, we don't see the risk to the guidance that we have given on the operating margin.

Abhishek Dalmia: Sure. First of all, Adrienne, thank you for the warm welcome, and I do look forward to working with you as well. To your question, first up, we don't see the risk to the guidance that we have given on the operating margin. However, the geography of that 8% might actually be more driven by gross margin because we are open to making discretionary investment in the SG&A as called out by Paul and Bracken in the previous call. We definitely feel very confident on delivering the operating margin.

Speaker #1: That's certainly always an option. What we really are doing, though, is trying to move our mix a little higher. So you'll see us emphasize more premium styles—not only collaborations, but also our own premium styles.

Speaker #2: However, the geography of that 8% might actually be more driven by gross margin, because we are open to making discretionary investment in the SG&A as called out by Paul and Bracken in the previous call.

Speaker #1: And then make sure we're delivering growth. You know, we got in this, we're back here. This business is very sensitive to growth.

Speaker #1: So as we start to grow on Vans, you're going to see that profitability will expand rapidly, as we know. So there's a lot of leverage there.

Speaker #2: So we definitely feel very confident on delivering the operating margin.

Speaker #6: Great. Thank you very much.

Speaker #1: Now, Abhishek, you want to take a second?

Adrienne Yih: Great. Thank you very much.

Speaker #5: Thank you, Adrian.

Bracken Darrell: Thank you, Adrienne.

Speaker #3: Your next question comes from the line of Michael Benetti with Evercore. Your line is open. Please go ahead.

Operator: Your next question comes from the line of Michael Binetti with Evercore. Your line is open. Please go ahead.

Speaker #7: Hey, guys. Can you hear me okay?

Speaker #2: However, the geography of that 8% might actually be more driven by gross margin, because we are open to making discretionary investment in the SG&A, as called out by Paul and Bracken in the previous call.

Michael Binetti: Hey, guys. Can you hear me okay?

Speaker #5: Yes, we can, Michael. Good to hear from you.

Bracken Darrell: Yes, we can, Michael. Good to hear from you.

Speaker #7: Hey. Yeah, thanks. Let me add my congrats to Avicek and Paul. Really appreciate the time, Paul. Good luck on your next adventure. Let me ask you on Vans.

[Analyst]: Hey. Yeah, thanks. Let me add my congrats to Abhishek and Paul. Really appreciate the time, Paul. Good luck on your next adventure. Let me ask you on Vans. Maybe in Europe, I will just ask a near-term question here. Still a pretty tough quarter after three years of declines there. Maybe just some color between wholesale and D2C, what is going on in that region? Obviously, your comments on what Vans will be doing globally in H2 are interesting. That is one market that I am interested to hear how that will go through that transition in H2. Then maybe we could just back up for a minute and take a historical look at Vans margins. A previous regime told us long ago that Vans had a low mid-20s operating margin at its peak. Today, it looks like it is lower mid-single digits.

Michael Binetti: Hey. Yeah, thanks. Let me add my congrats to Abhishek and Paul. Really appreciate the time, Paul. Good luck on your next adventure. Let me ask you on Vans. Maybe in Europe, I will just ask a near-term question here. Still a pretty tough quarter after three years of declines there. Maybe just some color between wholesale and D2C, what is going on in that region? Obviously, your comments on what Vans will be doing globally in H2 are interesting. That is one market that I am interested to hear how that will go through that transition in H2. Then maybe we could just back up for a minute and take a historical look at Vans margins. A previous regime told us long ago that Vans had a low mid-20s operating margin at its peak. Today, it looks like it is lower mid-single digits.

Speaker #2: So we definitely feel very confident on delivering the operating margin.

Speaker #7: Maybe in Europe, I'll just ask a near-term question here. Still a pretty tough quarter after, you know, three years of declines there. Maybe just some color between wholesale and DTC.

Speaker #5: Great. Thank you very much.

Speaker #1: Thank you, Adrian.

Speaker #3: Your next question comes from the line of Michael Benetti with Evercore. Your line is open. Please go ahead.

Speaker #7: What's going on in that region? Obviously, your comments on what Vans will be doing globally in the second half are interesting. That's one market that I'm interested to hear how that will go through that transition in the second half.

Speaker #6: Hey guys, can you hear me okay?

Speaker #1: Yes, we can, Michael. Good to hear from you.

Speaker #6: Hey. Yeah, thanks. Let me add my congrats to Abhishek and Paul. Really appreciate the time, Paul. Good luck on your next adventure. Let me ask you on vans.

Speaker #7: And then maybe we could just back up for a minute and take a historical look at Vans margins. You know, a previous regime told us long ago that Vans had a low mid-20s operating margin at its peak.

Speaker #6: Maybe in Europe, I'll just ask a near-term question here. Still a pretty tough quarter after, you know, three years of declines there. Maybe just some color between wholesale and DTC.

Speaker #7: Today, it looks like its lower mid-single digits. As I look back and think about it, maybe there's a diagnosis that, you know, R&D and marketing investments were far too low to drive that brand.

[Analyst]: As I look back and think about it, maybe there is a diagnosis that R&D and marketing investments were far too low to drive that brand. Can you just help us understand a little bit better today how much of those investment lines have changed as we look at the current margins in the business? I think that would really help us understand the margin opportunity from here. It seems like a lot of it is the gross margin, but maybe some of it is from the scale of the business and your confidence that you have the right size overhead for the medium-term top-line outlook.

Michael Binetti: As I look back and think about it, maybe there is a diagnosis that R&D and marketing investments were far too low to drive that brand. Can you just help us understand a little bit better today how much of those investment lines have changed as we look at the current margins in the business? I think that would really help us understand the margin opportunity from here. It seems like a lot of it is the gross margin, but maybe some of it is from the scale of the business and your confidence that you have the right size overhead for the medium-term top-line outlook.

Speaker #6: What's going on in that region? Obviously, your comments on what vans will be doing globally in the second half are interesting. That's one market that I'm interested to hear how that will go through that transition in the second half.

Speaker #7: Can you just help us understand a little bit better today how much of those investment lines have changed as we look at the current margins in the business?

Speaker #7: I think that would really help us understand the margin opportunity from here seems like a lot of it is the gross margin, but maybe some of it is from the scale of the business and your confidence that you have the right size overhead for the medium-term top-line outlook.

Speaker #6: And then maybe we could just back up for a minute and take a historical look at vans margins. You know, a previous regime told us long ago that vans had a low mid-20s operating margin at its peak.

Speaker #6: Today, it looks like it's lower mid-single digits. As I look back and think about it, maybe there's a diagnosis that, you know, R&D and marketing investments were far too low to drive that brand.

Speaker #5: Really interesting question. So the first one, your question, what does Europe look like from a DTC and wholesale from a DTC and wholesale standpoint relative to the US?

Bracken Darrell: A really interesting question. The first one, your question, what does Europe look like from a DTC and wholesale standpoint relative to the US? Similar. I would say behind the US from a timing standpoint, similar in trajectory. Same thing is happening. DTC is outperforming wholesale by a wide margin. E-com is positive this quarter, so it is already turned positive there, and the brick and mortar is improving. Overall, I would say very similar profile. Then wholesale is way south of that, as I said in the answer to Brooke's question. I think it is very similar. You want to answer the second one, Abhishek?

Speaker #6: Can you just help us understand a little bit better today how much of those investment lines have changed as we look at the current margins in the business?

Speaker #5: Similar. You know, I would say behind the US from a timing standpoint, similar in trajectory. Same things happening. So DTC is outperforming wholesale by a wide margin.

Speaker #6: I think that would really help us understand the margin opportunity from here seems like a lot of it is the gross margin, but maybe some of it is from the scale of the business and your confidence that you have the right size overhead for the medium-term top-line outlook.

Speaker #5: You know, e-com is positive this quarter. So it's already turned positive there. And the brick-and-mortar is improving. So overall, I would say very similar profile.

Speaker #5: And then wholesale is way south of that, as I said in my last the answer to Brooke's question. So I think it's very, very similar.

Speaker #1: Really interesting question. So the first one, your question, what does Europe look like from a DTC and wholesale from a DTC and wholesale standpoint relative to the U.S.?

Speaker #5: You want to answer the second one, Avicek?

Speaker #2: In terms of the overall investment in you know, in the shape we are continuing our investments in R&D, product investment is a big part of the investment.

Abhishek Dalmia: In terms of the overall investment and the shape, we are continuing our investments in R&D. Product investment is a big part of the investment. We are obviously with the momentum that we see in the brand. Marketing continues to be an area where we are doubling down, but more the right balance between brand and performance. We have taken a significant cost record in this part of the transformation. I do, Michael, to your question, we definitely see opportunity both in gross margin and SG&A leverage on the brand side.

Speaker #1: Similar. You know, I would say behind the U.S. from a timing standpoint, similar in trajectory. Same things happening. So DTC is outperforming wholesale by a wide margin.

Speaker #2: You know, we are obviously with the momentum that we see in the brand. Marketing continues to be an area where we are doubling down, but more the right balance between brand and performance.

Speaker #1: You know, e-com is positive this quarter. So it's already turned positive there. And the brick-and-mortar is improving. So overall, I would say very similar profile.

Speaker #2: We have taken a significant cost take on in this part of the transformation. So I do, Michael, to your question, we definitely see opportunity both in gross margin and SG&A leverage on the Vans side.

Speaker #1: And then wholesale is way south of that. As I said in my last—the answer to Brooke's question—so I think it's very, very similar.

Speaker #1: You want to answer the second one, Abhishek?

Speaker #5: Yeah. And what I would just add to that, I think I mean, underneath your question is, can you expect the profitability kind of from the peak that we had on Vans in our future?

Bracken Darrell: Yeah, I would just add to that, I think, underneath your question is, can you expect the profitability from the peak that we had on Vans in our future? Let's say two years from now, three years from now. The answer's probably no. I think we milked it too much, and we got to the point where I believe there was a point where I'm not sure I'm really doing a pure P&L here, but where we were making kind of 20% plus on operating margin. That's probably too high for a business like that. We're not going to do that. On the other hand, I do think we'll spend a little ahead on marketing, maybe product development, but at least marketing. We're probably spending ahead of what we'll do on a rate basis for the long term. The profitability's going to keep going up.

Speaker #2: In terms of the overall investment in, you know, in the shape we are continuing our investments in R&D, product investment is a big part of the investment.

Speaker #5: You know, let's say two years from now, three years from now. The answer is probably no. I don't I think we milked it too much.

Speaker #5: And we got to the point where I believe there was a point where I'm not sure I'm really doing a pure P&L here, but where we were making kind of, you know, 20% plus on operating margin.

Speaker #5: That's probably too high for a business like that. So we're not going to do that. On the other hand, I do think we'll spend a little ahead on marketing, maybe product development, but at least marketing.

Speaker #1: Yeah, I would just add to that. I think, I mean, underneath your question is, can you expect the profitability kind of from the peak that we had on vans in our future?

Speaker #5: We're probably spending ahead of what we'll do on a rate basis for the long term. So the profitability is going to keep going up.

Speaker #1: You know, let's say two years from now, three years from now. The answer is probably no. I don't, I think we milked it too much.

Speaker #5: And on top of that, you're going to get leverage on all the SG&A. So I think you're going to see we'll see the profitability get to a really attractive level over the next several years.

Bracken Darrell: On top of that, you're going to get leverage on all the SG&A. I think we'll see the profitability get to a really attractive level over the next several years. Probably not back to where we were five years ago.

Speaker #1: And we got to the point where I believe there was a point where I'm not sure I'm really doing a pure P&L here, but where we were making kind of, you know, 20% plus on operating margin.

Speaker #5: But probably not back to where we were, you know, five years ago.

Speaker #1: That's probably too high for a business like that, so we're not going to do that. On the other hand, I do think we'll spend a little ahead on marketing—maybe product development, but at least marketing.

Speaker #7: Okay. Thanks for all the color, guys. Appreciate it.

Michael Binetti: Okay. Thanks for all the color, guys. I appreciate it.

Speaker #5: Thank you, Michael.

Bracken Darrell: Thank you, Michael.

Speaker #3: Your next question comes from the line of Laurent Vasilescu with BNP. Your line is open. Please go ahead.

Operator: Your next question comes from the line of Laurent Vasilescu with BNP. Your line is open. Please go ahead.

Speaker #1: We're probably spending ahead of what we'll do on a rate basis for the long term. So the profitability is going to keep going up.

Speaker #5: Hi, Laurent. Good to hear you.

Bracken Darrell: Hi, Laurent. Good to hear from you.

Speaker #4: Good morning, Bracken. Thank you very much for taking my question.

Laurent Vasilescu: Good morning, Bracken. Thanks very much for taking my question.

Speaker #5: Thank you.

Bracken Darrell: Thank you.

Speaker #4: And much appreciated for all the color this morning. I wanted to ask quickly a near-term question, if I may. I think it's very helpful that you provided color on the brands, particularly for the quarter.

Laurent Vasilescu: Much appreciate for all the color this morning. I wanted to ask quickly a near-term question, if I may.

Speaker #1: SG&A. So I think you're going to see, we'll see the profitability get to a really attractive level over the next several years. But probably not back to where we were, you know, five years ago.

Laurent Vasilescu: Much appreciate for all the color this morning. I wanted to ask quickly a near-term question, if I may.

Bracken Darrell: Sure.

Laurent Vasilescu: I think it's very helpful that you provided color on the brands, particularly for the quarter. I think you said Vans down 9%, TNF flat. I'm curious, how do we get to overall flat revenues for Q2? It would imply that Timberland needs to be up meaningfully. I'm just trying to square that away. Within that, Bracken and team, I would love to hear what you're seeing in terms of wholesale demand in the Americas for the Timberland brand. One quick question, Paul, you've been very helpful over the last two years, and last quarter you were very helpful in trying to break out the benefit from the receivables for the gross margin. I'm curious to know if you saw that in the Q1 gross margin, if you can potentially help us with the bridge for the gross margin of up 10 basis points. Thank you so much.

Speaker #4: I think you said Vans down 9%, T&F flat. I'm curious, how do we get to overall flat revenues for Q2? I mean, it would imply that Timberland needs to be up meaningfully.

Speaker #6: Okay. Thanks for all the color, guys. Appreciate it.

Speaker #1: Thank you, Michael.

Speaker #3: Your next question comes from the line of Laurent Vasilescu with BNP. Your line is open. Please go ahead.

Speaker #1: Hi, Laurent. Good to hear you.

Speaker #4: Good morning, Bracken. Thanks very much for taking my question.

Speaker #4: I'm just trying to under-square that away. And within that, Bracken hear what you're seeing in terms of wholesale demand in the Americas for the Timberland brand.

Speaker #1: Thank you.

Speaker #4: And much appreciated for all the color this morning. I wanted to ask quickly, near-term question, if I may. I think it's very helpful that you provided color on the brands, particularly for the quarter.

Speaker #4: And then one quick question, Paul, you've been very, very helpful over the last two years and last quarter. You were very helpful in trying to break out the benefit from the receivables from for the gross margin.

Speaker #4: I think you said vans down 9%, TNF flat. I'm curious, how do we get to overall flat revenues for Q2? I mean, it would imply that Timberland needs to be up meaningfully.

Speaker #4: I'm curious to know, you know, if you saw that in the one Q gross margin, if you can potentially help us with the bridge for the gross margin of up 10 bips.

Speaker #4: I'm just trying to under-square that away. And within that, Bracken and team, I would love to hear what you're seeing in terms of wholesale demand in the Americas for the Timberland brand.

Speaker #4: Thank you so much.

Speaker #5: I'll try to take the first two, and then I'll hand out the third one off. You know, in terms of how do you get to flat revenue, I think you you know, we're trying our hardest not to guide every single brand here.

Bracken Darrell: I'll try to take the first two, then I'll hand the third one off. In terms of how do you get to flat revenue, I think we're trying our hardest not to guide every single brand here. You're right, you need to do the math and to get to your model, and we understand. We do expect Timberland to be better next quarter than we did last quarter. Although the other brands are also doing well, so I think we've got some good stories underneath there too.

Speaker #5: So but you're right. You need to you need to do the math and to get to your model. And we understand. I mean, you know, yeah, we do expect Timberland to be next better next quarter than we did last quarter.

Speaker #4: I'm curious to know, you know, if you saw that in the one Q gross margin, if you can potentially help us with the bridge for the gross margin of up 10 bips.

Speaker #5: And but although the other brands are also doing well. So I think we got some good stories underneath there too. In terms of.

Speaker #4: Thank you so much.

Speaker #1: I'll try to take the first two and then I'll hand out the third one off. You know, in terms of how do you get to flat revenue?

Speaker #7: I think I can take that on the gross margin question.

Abhishek Dalmia: I think I can take that on the gross margin question.

Speaker #5: Oh, sure.

Speaker #7: And also on adding on the Timberland, if you caught, you know, Laurent from, you know, the script that, you know, Paul talked about, you know, Timberland was 3%, but there was a differential impact, you know, because of one of the distributor impact that we have been managing.

Bracken Darrell: Oh, sure. Go right ahead, yeah.

Abhishek Dalmia: Also on adding on the Timberland, if you've got Laurent from the script that Paul talked about. Timberland was 3%, there was a differential impact because of one of the distributor impact that we have been managing and also the Middle East impact in EMEA. We do expect that trend to be much better in Q2. I think on your gross margin, let me just clarify a few points there. One, from a year-over-year perspective, we are up about 10 basis points, if you actually factor in from a FX perspective, it's another 140, 150 basis points. Part of that we obviously predicted, but part of that was not predicted. There is an impact around that.

Speaker #1: I think you, you know, we're trying our hardest not to guide every single brand here. So but you're right. You need to do the math and to get to your model.

Speaker #1: And we understand. I mean, you know, yeah, we do expect Timberland to be better next quarter than we did last quarter. And but although the other brands are also doing well.

Speaker #7: Also the Middle East impact in EMEA. So, you know, we do expect that trend to be much better in Q2. I think on your gross margin, let me just clarify a few points there.

Speaker #1: So, I think we've got some good stories underneath there, too, in terms of—

Speaker #7: One, from a year-over-year perspective, we are up about 10 basis points. But if you actually factor in from an FX perspective, it's another 140, 150 basis points.

Speaker #2: I think I can take that on the gross margin question.

Speaker #1: Oh, sure.

Speaker #2: And also on adding on the Timberland, if you caught, you know, Laurent from, you know, the script that, you know, Paul talked about, you know, Timberland was 3%, but there was a differential impact, you know, because of one of the distributor impact that we have been managing.

Speaker #7: Part of that, we obviously predicted, but part of that was not predicted. So there is an impact around that. And then two, you know, if you look at the segment reporting in the Q that will come out, you will see that obviously there's a makeshift between outdoor and active from our expectation.

Abhishek Dalmia: Two, if you look at the segment reporting in the Q that will come out, you will see that obviously there's a mix shift between Outdoor and Active from our expectation. Outdoor, obviously driven by TNF, was better than our expectation in Q1, and Vans was slightly slower. That actually impacted the gross margin as well. We feel very confident on the gross margin improving over the year as well, even further going for the full year.

Speaker #2: Also, the Middle East impact in EMEA. So, you know, we do expect that trend to be much better in Q2. I think on your gross margin, let me just clarify a few points there.

Speaker #7: So outdoor obviously driven by T&F was better than our expectation in Q1. And Vans was a slightly slower. So that actually impacted the gross margin as well.

Speaker #2: One, from a year-over-year perspective, we are up about 10 basis points. But if you actually factor in from an FX perspective, it's another 140, 150 basis points.

Speaker #7: But we feel very confident on the gross margin improving, you know, over the year as well, even further, going for the full year.

Speaker #2: Part of that, we obviously predicted, but part of that was not predicted. So there is an impact around that. And then two, you know, if you look at the segment reporting in the Q that will come out, you will see that obviously there's a makeshift between outdoor and active from our expectation.

Speaker #5: Yeah. Let me just answer one other question. I missed in the first one, which was how's wholesale looking in Americas? You know, we're trying to slice this too thin by quarter, by channel, by everything.

Bracken Darrell: Yeah, let me just answer one other question I missed in the first one, which was how's wholesale looking in Americas? We're trying not to slice this too thin by quarter, by channel, by everything. What I would say is wholesale was solid. Search interest continue to be up in the key markets for Timberland, looks pretty good. You want to?

Speaker #5: But what I would say is wholesale is solid. You know, search interests continue to be up in the key markets for Timberland. So looks pretty good.

Speaker #2: So outdoor obviously driven by TNF was better than our expectation in Q1. And vans was a slightly slower. So that actually impacted the gross margin as well.

Speaker #4: I guess to your tariff question particularly, our receivable question, I think, there's no benefit on the gross margin at all, right? So we took the entire benefit in Q4 of last year, from our receivables standpoint.

Paul Vogel: I guess to your tariff question, particularly a receivable question, I think. There's no benefit on the gross margin at all, right? We took the entire benefit in Q4 of last year from a receivables standpoint. You will obviously see it in the free cash flow side, which we talked about. There was $50 million or so that we got back. There's obviously going to be some quarterly mismatches between what you see in the P&L and what you see in the cash flow statement, which Abhishek Dalmia will guide moving forward. There was no impact at all in terms of anything with respect to tariffs on the P&L or the gross margin. You'll only see it on the cash flow statement where we actually got cash in in Q1.

Speaker #2: But we feel very confident on the gross margin improving over the year as well, even further, going for the full year.

Speaker #1: Yeah. Let me just answer one other question. I missed in the first one, which was how's wholesale looking in Americas? You know, we're trying to slice this too thin.

Speaker #4: You will obviously see it in the free cash flow side, which we talked about. So there was $50 million or so that we got back.

Speaker #4: So there's obviously going to be some quarterly mismatches between what you see in the P&L and what you see in the cash flow statement, which Abhishek will guide moving forward.

Speaker #1: By quarter, by channel, by everything. But what I would say is, wholesale is solid. You know, search interest continued to be up in the key markets for Timberland.

Speaker #4: But there was no impact at all in terms of anything with respect to tariffs on the P&L or the gross margin. You'll only see it on the cash flow statement where we actually got cash in in Q1.

Speaker #1: So looks pretty good.

Speaker #4: I guess to your tariff question particularly, our receivable question, I think, there's no benefit on the gross margin at all, right? So we took the entire benefit.

Speaker #4: Thank you so much. Best of luck.

Laurent Vasilescu: Thank you so much. Best of luck.

Speaker #4: In Q4 of last year, from our receivables standpoint, you will obviously see it in the free cash flow side, which we talked about. So there was $50 million or so that we got back.

Speaker #5: Thanks, Laurent.

Bracken Darrell: Thanks, Laurent.

Speaker #3: Your next question comes from the line of Paul Ledjway with Citigroup. Your line is open. Please go ahead.

Operator: Your next question comes from the line of Paul Lejuez with Citigroup. Your line is open. Please go ahead.

Speaker #6: Hey. Thanks, guys. I want to come back to SG&A. I'm curious if mid-single-digit growth is the right way to think about the SG&A build in future quarters.

Speaker #4: So there's obviously going to be some quarterly mismatches between what you see in the P&L and what you see in the cash flow statement, which Abhishek will guide moving forward.

Paul Lejuez: Hey, thanks guys. I'm going to come back to SG&A. I'm curious if mid-single-digit growth is the right way to think about the SG&A build in future quarters, and if not, for how long should we expect SG&A to grow in that range? Anything lumpy we need to know about in the remaining quarters this year? Similarly, just as we look to that medium-term goal of 10% in FY29 from the current 8% this year, how much of that 200 basis points plus will be gross margin improvement versus SG&A as you think about it?

Paul Lejuez: Hey, thanks guys. I'm going to come back to SG&A. I'm curious if mid-single-digit growth is the right way to think about the SG&A build in future quarters, and if not, for how long should we expect SG&A to grow in that range? Anything lumpy we need to know about in the remaining quarters this year? Similarly, just as we look to that medium-term goal of 10% in FY2029 from the current 8% this year, how much of that 200 basis points plus will be gross margin improvement versus SG&A as you think about it?

Speaker #6: And if not, you know, for how long should we expect SG&A to grow in that range? Anything lumpy we need to know about in the remaining quarters of this year?

Speaker #4: Thank you so much. Best of luck.

Speaker #6: And then similarly, just as we look to that medium-term goal of 10% in F29, from the current 8% this year, how much of that 200 basis points plus will be gross margin improvement versus SG&A as you think about it?

Speaker #1: Thanks, Laurent.

Speaker #3: Your next question comes from the line of Paul Ledjway with Citigroup. Your line is open. Please go ahead.

Speaker #5: Hey, thanks, guys. I'm going to come back to SG&A. I'm curious if mid-single digit growth is the right way to think about the SG&A build in future quarters.

Speaker #5: You want to take that?

Speaker #7: Yeah. Sure. So first of all, Paul, you know, from an overall SG&A perspective, this is again something which we called out even in the May earnings and right now.

Bracken Darrell: You want to take that?

Abhishek Dalmia: Yeah, sure. First of all, Paul, from an overall SG&A perspective, this is again, something which we called out even in the May earnings and right now. It's a deliberate investment in marketing and DTC and brand-building initiatives in H1 versus H2. The good news there is two. One, all the savings that we actually did around SG&A from a transformation perspective is still part of the run rate. Two, a lot of the spend that we are seeing in H1 is discretionary, so we have full control over that. That's one piece of it. To your question around the broader medium-term target of 10%, we did highlight that the shape, initially when we launched those medium-term targets back in FY24 in our first investor day, we did say that the shape of that is probably going to be about 55/45.

Abhishek Dalmia: Yeah, sure. First of all, Paul, from an overall SG&A perspective, this is again, something which we called out even in the May earnings and right now. It's a deliberate investment in marketing and DTC and brand-building initiatives in H1 versus H2. The good news there is two. One, all the savings that we actually did around SG&A from a transformation perspective is still part of the run rate. Two, a lot of the spend that we are seeing in H1 is discretionary, so we have full control over that. That's one piece of it. To your question around the broader medium-term target of 10%, we did highlight that the shape, initially when we launched those medium-term targets back in FY2024 in our first Investor Day, we did say that the shape of that is probably going to be about 55/45.

Speaker #5: And if not, you know, for how long should we expect SG&A to grow in that range? Anything lumpy we need to know about in the remaining quarters of this year?

Speaker #7: You know, it's a deliberate investment in marketing and DTC and brand building initiatives in the first half versus the second half. The good news there is two, one, all these savings that we actually did around SG&A from a transformation perspective is still part of the run rate.

Speaker #5: And then, similarly, just as we looked at that medium-term goal of 10% in FY29 from the current 8% this year, how much of that 200 basis points plus will be gross margin improvement versus SG&A, as you think about it?

Speaker #7: And two, a lot of the spend that we are seeing in first half is discretionary. So we have full control over that. So that's one piece of it.

Speaker #1: Do you want to take that?

Speaker #2: Yeah, sure. So first of all, Paul, you know, from an overall SG&A perspective, this is again something which we called out even in the May earnings and right now.

Speaker #7: To your question around, you know, the broader medium-term target of 10%, we did highlight that, that the shape you know, initially when we launched those medium-term targets back in FY24 in our first investor day, we did say that the shape of that is probably going to be about 55, 45.

Speaker #2: You know, it's a deliberate investment in marketing and DTC and brand building initiatives in the first half versus the second half. The good news there is two, one, all the savings that we actually did around SG&A from a transformation perspective is still part of the run rate.

Speaker #7: We absolutely see the geography changing on that. We see upside in, you know, gross margin, which actually gives us more flexibility to continue investing both in product development as well as in marketing and brand building initiatives.

Abhishek Dalmia: We absolutely see the geography changing on that. We see upside in gross margin, which actually gives us more flexibility to continue investing both in product development as well as in marketing and brand-building initiatives. The short answer is, the geography of that 10% is going to be slightly driven more by gross margin, versus SG&A leverage down to 45.

Speaker #2: And two, a lot of the spend that we are seeing in first half is discretionary. So we have full control over that. So that's one piece of it.

Speaker #7: So the geography, the short answer is the geography of that 10% is going to be slightly driven, more by gross margin, versus SG&A leverage down to 45.

Speaker #2: To your question around, you know, the broader medium-term target of 10%, we did highlight that—the shape, initially, when we launched those medium-term targets back in FY24, in our first Investor Day. We did say that the shape of that is probably going to be about 55/45.

Speaker #5: And remember, when we guided that, I think there was 100 basis point impact on that by Dickey's, which makes it so.

Bracken Darrell: Remember, when we guided that, I think there was 100 basis point impact on that by Dickies.

Speaker #7: That's right. We do get a 100 basis points good guy just from Dickey's diversity chart itself.

Abhishek Dalmia: That's right. Yeah. We do get 100 basis points good guide just from Dickies divestiture itself.

Speaker #2: We absolutely see the geography changing on that. We see upside in, you know, gross margin, which actually gives us more flexibility to continue investing both in product development as well as in marketing and brand building initiatives.

Speaker #6: Guys, thanks. I'll take that initial guidance was excluding any sales growth. You now including sales growth as part of that 10%?

Paul Lejuez: Got it. Thanks. I think that initial guidance was excluding any sales growth. Are you now including sales growth as part of that 10%?

Speaker #2: So the geography, the short answer is the geography of that 10% is going to be slightly driven, more by gross margin, versus SG&A leverage down to 45.

Speaker #4: Well, I think so the guidance was no sales growth from that point in time, right? So obviously it's come down a little bit. So we've always said if it comes down a little bit, we've got to get back to that baseline.

Abhishek Dalmia: Well, I think.

Bracken Darrell: A little bit

Abhishek Dalmia: guidance was no sales growth from that point in time.

Bracken Darrell: It goes both forward and back.

Abhishek Dalmia: Obviously it's come down a little bit. We've always said if it comes down a little bit, we've got to get back to that baseline, but it wasn't growth above the baseline.

Speaker #1: And remember, when we guided that, I think there was a 100 basis point impact on that by Dickies.

Speaker #4: But it wasn't growth above the baseline.

Speaker #5: That's right.

Bracken Darrell: That's right.

Speaker #6: Got it. Thank you. Good luck, guys. Good luck, Paul.

Paul Lejuez: Got it. Thank you. Good luck, guys. Good luck, Paul.

Paul Lejuez: Got it. Thank you. Good luck, guys.

Speaker #2: That's right. Yeah, we do get a 100 basis points good guy, just from Dickies' diversity chart itself.

Speaker #4: Thank you.

Abhishek Dalmia: Good luck, Paul.

Speaker #5: Thank you, Paul.

Abhishek Dalmia: Thank you.

Paul Lejuez: Thank you.

Bracken Darrell: Thank you, Paul.

Speaker #3: Your next question comes from the line of Simeon Siegel with Guggenheim. Your line is open. Please go ahead.

Operator: Your next question comes from the line of Simeon Siegel with Guggenheim. Your line is open. Please go ahead.

Speaker #5: Yeah, thanks. I'll take that initial guidance was excluding any sales growth. You're now including sales growth as part of that 10%.

Speaker #6: Thanks. Hey, guys. Morning, everyone. Paul, it's been great working with you. Best of luck. Abhishek, congrats on the added role. So Bracken, just thinking about that Vans wholesale dynamics for a second, can you just.

Simeon Siegel: Thanks. Hey, guys. Morning, everyone. Paul, it's been great working with you. Best of luck. Abhishek, congrats on the added role. Bracken, just thinking about the Vans wholesale dynamics for a second, can you just to how much you think is at this point, still resetting the wholesale base versus how much is demand continuing to rebase and just maybe how has that evolved over time? As you think about those two dynamics. Just follow up on the regional. Do you see any meaningful brand divergence in brand perception health in the consumers by region?

Speaker #4: Well, I think the guidance was no sales growth from that point in time, right? So obviously it's come down a little bit. So we've always said if it comes down a little bit, we've got to get back to that baseline.

Speaker #6: To how much you think is at this point still resetting the wholesale base versus how much is demand continuing to rebase? And just maybe how has that evolved over time?

Speaker #4: But it wasn't growth above the baseline.

Speaker #1: That's right.

Speaker #6: So as you think about those two dynamics, and then to the just follow-up on the regional, do you see any meaningful brand divergence in brand perception health in the consumers by region?

Speaker #5: Got it. Thank you. Good luck, guys. Good luck, Paul.

Speaker #4: Thank you.

Speaker #1: Thank you, Paul.

Speaker #3: Your next question comes from the line of Simeon Siegel with Guggenheim. Your line is open. Please go ahead.

Speaker #5: Thanks. Hey, guys. Morning, everyone. Paul, it's been great working with you. Best of luck. Abhishek, congrats on the added role. So Bracken, just thinking about that vans wholesale dynamics for a second, can you just.

Speaker #5: Okay. So yeah, on your first question, how much of it's resetting the base, how much is it's demand? That's a hard one to answer.

Bracken Darrell: Okay. Yeah, on your first question, how much of it's resetting the base, how much of it's demand? That's a hard one to answer. I think right now what we have in our DTC is a different product mix than we have in wholesale. Whether you call that demand or you call it resetting, I wouldn't say it's bringing in new distribution and exiting distribution. It's not that kind of strong mix change that we had when I first got here. It's more really making sure they've got the right assortments and the right amount of assortment on the floor. That's really the change that we see happening ahead. The second question was?

Speaker #5: You know, I think, you know, right now you don't have, you know, what we have in our DTC is a different product mix than we have in wholesale.

Speaker #5: To how much you think is at this point still resetting the wholesale base versus how much is demand continuing to rebase? And just maybe how has that evolved over time?

Speaker #5: So whether you call that demand, you call it resetting. I wouldn't say it's, you know, bringing in new distribution and exiting distribution. It's not that kind of strong mixed change that we had when I first got here.

Speaker #5: So, as you think about those two dynamics, and then, just to follow up on the regional, do you see any meaningful divergence in brand perception or health among consumers by region?

Speaker #5: It's more, you know, really making sure they've got the right assortments and the right amount of assortment, you know, on the floor. So that's really the change that we see happening ahead.

Speaker #1: Okay. So yeah, on your first question, how much of it's resetting the base, how much is it's demand? That's a hard one to answer.

Speaker #5: Second question was.

Speaker #7: Brand perception between the regions.

Speaker #1: You know, I think, you know, right now you don't have—you know, what we have in our DTC is a different product mix than we have in wholesale.

Abhishek Dalmia: Brand perception between the regions.

Speaker #5: Brand perception of the region. Yeah, we've always, you know, the Vans brand has always been much stronger in the US than it is in Europe and stronger in Europe than it is in APAC.

Bracken Darrell: Brand perception of the region. Yeah. The Vans brand has always been much stronger in the US than it is in Europe and stronger in Europe than it is in APAC, and that's still true. The good news is the trend line on the two biggest geographies looks very similar. EMEA is just behind the US in terms of that trend.

Speaker #1: So whether you call that demand, you call it resetting. I wouldn't say it's, you know, bringing in new distribution and exiting distribution. It's not that kind of strong mix change that we had when I first got here.

Speaker #5: And that's still true. The good news is the trend line on the biggest, the two biggest geographies looks very similar. You know, Amy is just behind the US in terms of that trend.

Speaker #1: It's more, you know, really making sure they've got the right assortments and the right amount of assortment, you know, on the floor. So that's really the change that we see happening ahead.

Speaker #6: Great. Thanks, guys.

Speaker #5: Thanks.

Simeon Siegel: Great. Thanks, guys.

Bracken Darrell: Thank you.

Speaker #3: Your next question comes from the line of Jonathan Comp with Baird. Your line is open. Please go ahead.

Simeon Siegel: Thanks a lot.

Operator: Your next question comes from the line of Jonathan Komp with Baird. Your line is open. Please go ahead.

Speaker #1: Second question was.

Speaker #2: Brand perception between the regions.

Speaker #4: Yeah. Hi. Good morning. Thank you. Bracken, just to follow up on Vans, any more color is the team thinks about translating some of the success and more limited around styles?

Jonathan Komp: Yeah. Hi, good morning. Thank you. Bracken, just to follow up on Vans. Any more color as the team thinks about translating some of the success of more limited-run styles into a broader reception and change in the mix for wholesale, just any more color on how you see that playing out? Abhishek, a broader question as we think about the H2 outlook here, the implied revenue inflection towards 4% plus and a very strong double-digit growth in operating profit year-over-year. Can you give a little more color just to get comfortable with that ramp into the H2 here? Thank you.

Speaker #1: Brand perception of the region. Yeah, we've always, you know, the vans brand has always been much stronger in the U.S. than it is in Europe and stronger in Europe than it is in APAC.

Speaker #1: And that's still true. The good news is the trend line on the two biggest geographies looks very similar. You know, AMEA is just behind the U.S.

Speaker #4: You know, into a broader reception and change in the color on how you see that playing out? And then Abhishek, a broader question as we think about the second half outlook here.

Speaker #1: in terms of that trend.

Speaker #5: Great. Thanks, guys.

Speaker #1: Thank you.

Speaker #3: Your next question comes from the line of Jonathan Comp with Baird. Your line is open. Please go ahead.

Speaker #4: You know, the implied, you know, revenue inflection towards, you know, 4% plus in a very strong double-digit growth in operating profit year over year.

Speaker #4: Yeah, hi. Good morning. Thank you. Bracken, just to follow up on vans, any more color is the team thinks about translating some of the success of more limited run styles?

Speaker #4: Can you give a little more color just to get comfortable with that ramp? Into the second half here? Thank you.

Speaker #5: Yeah. So a little more color. So as I said in my opening, I think we can do a better job. We're learning. I think we can do a better job of translating those immediate, like, really obviously.

Speaker #4: You know, into a broader reception and change in the mix for wholesale. Just any more color on how you see that playing out? And then Abhishek, a broader question as we think about the second half outlook here.

Bracken Darrell: Yeah. A little more color. As I said in my opening, I think we could do a better job. We're learning. I think we could do a better job of translating those immediately. Like really, obviously, I hope you're looking at it and saying, Wow, they really do have some hits. We're serially launching things now that are selling out really fast. Some have very low quantities, like some of these collabs. Some have larger quantities. This last souvenir drop was not a small quantity. It sold out really fast. We know we can do a better job of translating that volume into sales, whether it's our own DTC or, as you said, our wholesale. In terms of wholesale, a little more color on that. You're going to see us bring in some of those things, like Pearlized, into wholesale distribution.

Speaker #5: I mean, I hope you're looking at it and saying, wow, they really do have some hits. I mean, we're just, we're serially launching things now that are selling out really fast.

Speaker #4: You know, the implied, you know, revenue inflection towards, you know, 4% plus, and a very strong double-digit growth in operating profit year over year.

Speaker #5: Some have very low quantities, like some of these collabs. Some have larger quantities. Like this suit, this last souvenir drop was not a small quantity.

Speaker #4: Can you give a little more color just to get comfortable with that ramp into the second half here? Thank you.

Speaker #5: It sold out really fast. I think we could, we know we can do a better job of translating that volume into sales, whether it's your own DTC or, as you said, our wholesale.

Speaker #1: Yeah. So a little more color. So as I said in my opening, I think we can do a better job. We're learning. I think we can do a better job of translating those immediate, like really obviously.

Speaker #5: In terms of wholesale, we're, yeah, a little more color on that. You're going to see us bring in some of those things, like Pearlize.

Speaker #5: Into wholesale distribution. And, you know, there are consumers who want to buy that. And right now, if they're not going into our stores, they're not seeing it.

Speaker #1: I mean, I hope you're looking at it and saying, wow, they do really do have some hits. I mean, we're just, we're serially launching things now that are selling out really fast.

Bracken Darrell: There are consumers who want to buy that. Right now, if they're not going into our stores, they're not seeing it. We don't look differentiated enough when you walk into wholesale. One of the things I love about wholesale is when somebody walks into wholesale, they often don't have a brand in mind. They walk in with a category in mind. When you walk in with a category in mind, you need to have something distinctive to sell because other people will do that. We need to have that. We've tended to have the same kind of product in wholesale that we've had historically. Whether it's black and white Old Skools or checkered Slip-Ons. We really need to make sure we've got refreshed product. We have some of that in wholesale, but not nearly enough. That's going to start to come.

Speaker #5: So we don't look differentiated enough when you walk into wholesale. You know, one of the things I always said, well, I think I love about wholesale is when somebody walks into wholesale, they often don't have a brand in mind.

Speaker #1: Some have very low quantities, like some of these collabs. Some have larger quantities. Like this suit, this last souvenir drop was not a small quantity.

Speaker #1: It sold out really fast. I think we know we can do a better job of translating that volume into sales, whether it's your own DTC or, as you said, our wholesale.

Speaker #5: They walk in with a category in mind. And when you walk in with a category in mind, you need to have something distinctive to sell.

Speaker #5: Because other people will do that. And so we need to have that. We've tended to have the same kind of product in wholesale that we've had historically.

Speaker #1: In terms of wholesale, we're, yeah, a little more color on that. You're going to see us bring in some of those things, like Pearlized, into wholesale distribution.

Speaker #5: You know, whether it's black and white old schools or checkered slip-ons, you know. And so we really need to make sure we've got refreshed product.

Speaker #1: And, you know, there are consumers who want to buy that. And right now, if they're not going into our stores, they're not seeing it.

Speaker #5: And we have some of that in wholesale, but not nearly enough. And so that's going to start to come. Now, the challenge we have, I think, is how do we, how do we accelerate and maximize that heat?

Speaker #1: So, we don't look differentiated enough when you walk into wholesale. You know, one of the things I've always said, and what I love about wholesale, is that when somebody walks into wholesale, they often don't have a brand in mind.

Bracken Darrell: Now, the challenge we have, I think, is how do we accelerate and maximize that heat? I think this is a learning curve we're on right now to get better and better at that. I think our team is really learning all the way throughout the chain of the business, and we'll get better at that over time. We're not going to let up. We're going to keep coming with these new styles and new silhouettes serially forever. That's the move we're making here as a company.

Speaker #1: They walk in with a category in mind. And when you walk in with a category in mind, you need to have something distinctive to sell because other people will do that.

Speaker #5: And I think this is a learning curve we're on right now to get better and better at that. And I think our team is really learning.

Speaker #5: All the way throughout the chain of the business. And we'll get better at that over time. But we're not going to let up. We're going to keep coming with these new styles and new silhouettes serially forever.

Speaker #1: And so we need to have that. We've tended to have the same kind of product in wholesale that we've had historically. You know, whether it's black and white old schools or checkered slip-ons, you know.

Speaker #5: I mean, that's our, that's the move we're making here as a company.

Speaker #1: And so we really need to make sure we've got refreshed product. We have some of that in wholesale, but not nearly enough. So, that's going to start to come.

Speaker #7: Yeah. And Jonathan, to your question, first up, you might feel like it's a bold move for an incoming CEO to raise the guidance. But I've been in closed work with CFO.

Abhishek Dalmia: Yeah. Jonathan, to your question, first up, you might feel like it's a bold move for an incoming CEO to raise the guidance, but I've been in close work.

Speaker #1: Now, the challenge we have, I think, is how do we, how do we accelerate and maximize that heat? And I think this is a learning curve we're on right now to get better and better at that.

Bracken Darrell: Don't promote yourself yet.

Speaker #7: Yes. Coming in. But, you know, I've been working very closely with Bracken and Paul, you know, over the last two years. And we feel very confident because of three reasons.

Abhishek Dalmia: Yes. Coming in. I've been working very closely with Bracken and Paul over the last two years, and we feel very confident because of three reasons. One, Bracken did call out that Vans, we have better visibility into the wholesale business for Vans, which is going to be minus two or better. That's one. I did call out as part of the guidance that both TNF and Timberland are going to be roughly in line with the growth rates of last year. That is definitely something for TNF. It's a wholesale timing between Q2 and Q3 and the rest of the quarters. For other brands, we expect again to be similar in the line.

Speaker #1: And I think our team is really learning, all the way throughout the chain of the business. And we'll get better at that over time.

Speaker #1: But we're not going to let up. We're going to keep coming with these new styles and new silhouettes, serially, forever. I mean, that's our— that's the move we're making here as a company.

Speaker #7: One, you know, Bracken did call out that Vans, we have better visibility into the wholesale business for Vans, which is going to be minus two or better.

Speaker #7: So that's one. I did call out as part of the guidance that, you know, both TNF and Timberland are going to be roughly in line with the growth rates of last year.

Speaker #2: Yeah. And Jonathan, to your question, first up, you might feel like it's a bold move for an incoming CEO to raise the guidance. But I've been in close work with CFO.

Speaker #7: So that is definitely something for TNF. It's a wholesale timing between Q2 and Q3. And the rest of the quarters. And then for other brands, we expect again to be similar in the line.

Speaker #2: Yes. Coming in. But, you know, I've been working very closely with Bracken and Paul, you know, over the last two years. And we feel very confident because of three reasons.

Speaker #7: So if you do the math, you know, you're right that the second half from a growth rate perspective will be around, you know, three to four percent.

Abhishek Dalmia: If you do the math, you're right that the H2 from a growth rate perspective will be around 3% to 4%. That gives us the confidence that we will be definitely -2% or better for the FY, or +2% or better for the FY.

Speaker #2: One, you know, Bracken did call out that vans, we have better visibility into the wholesale business for vans, which is going to be minus two or better.

Speaker #7: But that gives us the confidence that we will be definitely minus two or better for the full year. Or plus two or better for the full year.

Speaker #2: So that's one. I did call out as part of the guidance that, you know, both TNF and Timberland are going to be roughly in line with the growth rates of last year.

Speaker #4: Okay. Thank you very much.

Jonathan Komp: Okay. Thank you very much.

Speaker #5: Thank you.

Bracken Darrell: Thank you.

Speaker #2: So that is definitely something for TNF. It's a wholesale timing between Q2 and Q3. And the rest of the quarters. And then for other brands, we expect again to be similar in the line.

Speaker #3: Your final question comes from the line of Jay Sol with UBS, your line is open. Please go ahead.

Operator: Your final question comes from the line of Jay Sole with UBS. Your line is open. Please go ahead.

Speaker #4: Great. Thank you so much. Maybe, Bracken, if I can just ask you about trends in Asia and Greater China. You know, specifically by brand, it seems like that region's been a little bit on the choppy side.

Jay Sole: Great. Thank you so much. Maybe, Bracken, if I can just ask you about trends in Asia and Greater China, specifically by brand. It seems like that region's been a little bit on the choppy side, but maybe just talk to us about what you're seeing there and maybe what the outlook is going forward the rest of the year.

Speaker #2: So if you do the math, you know, you're right that the second half from a growth rate perspective will be around, you know, three to four percent.

Speaker #2: But that gives us the confidence that we will be definitely minus two or better for the full year. Or plus two or better for the full year.

Speaker #4: But, you know, maybe just talk to us about what you're seeing there and maybe what the outlook is going forward for the rest of the year.

Speaker #5: Yeah. I mean, you can see in our numbers that the China APAC in general has been more muted than the rest of the, than it's been historically.

Bracken Darrell: Yeah. You can see in our numbers that the China APAC in general has been more muted than it's been historically. We expect that to really continue. I think TNF's been relatively flat, that's not something we've historically had. Now, as I said before, I think part of that is us. I don't think we have enough innovation in APAC, especially with the competition there, which is really strong as we talked about before, I love strong competition, it's making us better. Believe me, we are doubling down on what we're doing internally to make sure we're in a position to win there. Overall, I would say you can kind of expect more of the same. There's no real new news there.

Speaker #4: Okay. Thank you very much.

Speaker #1: Thank you.

Speaker #5: And we expect that to really continue. You know, I think TNF's been relatively flat in that's not, that's not something we've historically had. Now, I think, as I said before, I think part of that is us.

Speaker #3: Your final question comes from the line of Jay Sol with UBS. Your line is open. Please go ahead.

Speaker #4: Great, thank you so much. Maybe, Bracken, if I can just ask you about trends in Asia and Greater China? Specifically by brand, it seems like that region's been a little bit on the choppy side.

Speaker #5: You know, we're just, we don't have enough. I don't think we have enough innovation in APAC. You know, especially with the competition there, which is, which is really strong as we talked about before.

Speaker #4: But, you know, maybe just talk to us about what you're seeing there and maybe what the outlook is going forward with the rest of the year.

Speaker #5: And I love strong competition. So it's making us better. And believe me, we are doubling down on what we're doing internally to make sure we're in a position to win there.

Speaker #1: Yeah. I mean, you can see in our numbers that the China APAC in general has been more muted than the rest of the, than it's been historically.

Speaker #5: So overall, I would say you can kind of expect more of the same. There's no real new news there. I do think, you know, it's not as big a region as the other two for us, but it's super important.

Speaker #1: And we expect that to really continue. You know, I think TNF's been relatively flat, and that's not something we've historically had.

Bracken Darrell: I do think it's not as big a region as the other two for us, it's super important, we're going to get stronger and stronger there over time. It will be a little more muted than it's been in the past for the next year or two. Thank you.

Speaker #5: And we're going to get stronger and stronger there over time. But, you know, it will be a little more muted than it's been in the past for the next year or two.

Speaker #1: I think, as I said before, I think part of that is us. You know, we're just, we don't have enough. I don't think we have enough innovation in APAC.

Speaker #5: Thank you.

Speaker #4: All right. Okay. Thank you so much.

Speaker #1: You know, especially with the competition there, which is, which is really strong as we talked about before. And I love strong competition. So it's making us better.

Jay Sole: Got it. Okay. Thank you so much.

Speaker #5: Excellent. Well, look, thank you so much. You know, we're super, we're finishing Q1. It's a little, it's just Q1. But we, but it was really important for Q1 for us because, as you know, we did exceed our guidance.

Bracken Darrell: Excellent. Well, look, thank you so much. We're finishing Q1. It's just Q1, but it was a really important Q1 for us because as you know, we did exceed our guidance, and we also just feel like during this quarter, we've gotten much better visibility to the back half of the year. We're pumped about the start of the year. We're not going to pretend that this quarter was great. It wasn't. It was better than our expectations, but it really sets us up for a year of accelerated growth, which is great. Very modest, I'll say that. That accelerated growth story is going to get stronger and stronger over the following year. Thanks, everyone. We look forward to seeing you in one-on-ones or group meetings or next quarter.

Speaker #1: And believe me, we are doubling down on what we're doing internally to make sure we're in a position to win there. So overall, I would say you can kind of expect more of the same.

Speaker #5: And we also just feel like during this quarter we've gotten much better visibility to the back half of the year. So you know, we're pumped about the start of the year.

Speaker #1: There's no real new news there. I do think, you know, it's not as big a region as the other two for us, but it's super important.

Speaker #1: And we're going to get stronger and stronger there over time. But, you know, it will be a little more muted than it's been in the past for the next year or two.

Speaker #5: We're not going to pretend that this quarter was great. It wasn't. But it was better than our expectations. But it really sets us up for another year of, for a year of accelerated growth, which is great.

Speaker #1: Thank you.

Speaker #4: Okay. Thank you so much.

Speaker #1: Excellent. Well, look, thank you so much. You know, we're, we're super, we're finishing Q1. It's a little, it's just Q1, but we, but it was really important for Q1 for us because, as you know, we did exceed our guidance.

Speaker #5: Very modest, I'll say that. But that accelerated growth story is going to get stronger and stronger over the following year. So thanks, everyone. We look forward to seeing you in one-on-ones or group meetings or next quarter.

Speaker #1: And we also just feel like during this quarter, we've gotten much better visibility to the back half of the year. So, you know, we're pumped about the start of the year.

Operator: This concludes today's call. Thank you for attending. You may now disconnect.

Speaker #1: We're not going to pretend that this quarter was great. It wasn't, but it was better than our expectations. But it really sets us up for another year of, for a year of accelerated growth, which is great.

Speaker #1: Very modest, I'll say that. But that accelerated growth story is going to get stronger and stronger over the following year. So, thanks everyone. We look forward to seeing you in one-on-ones, group meetings, or next quarter.

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