V.F. Corporation

Hello and welcome to the VF Corporation fourth quarter 2024 earnings call. If anyone should require operator assistance, please press star zero on your telephone keypad. A question and answer session will follow the formal presentation. We ask you please limit yourselves to one question. You may be placed into question queue at any time by pressing star one on your telephone keypad. As a reminder, this conference is being recorded. It's now my pleasure to turn the call over to Vice President, Investor Relations, Allegra Perry. Please go ahead, Allegra.

Good afternoon and welcome to VF Corporation's fourth quarter fiscal 2024 conference call. Participants on today's call will make forward-looking statements. These statements are based on current expectations and are subject to uncertainties that could cause actual results to differ materially. These uncertainties are detailed in documents filed regularly with the SEC. Unless otherwise noted, amounts referred to on today's call will be on an adjusted constant dollar basis, which we've defined in the press release that was issued this afternoon and which we use as lead numbers in our discussion because we believe they more accurately represent the true operational performance and underlying results of our business. You may also hear us refer to reported amounts which are in accordance with U.S. GAAP, reconciliations of GAAP measures to adjusted amounts can be found in the supplemental financial tables included in the press release, which identify and quantify all excluded items and provide management's view of why this information is useful to investors. Joining me on the call will be VF's President and Chief Executive Officer Bracken Darrell, EVP's Chief Commercial Officer and President Emerging Brands Martino Scaviacorini, and EVP and Chief Financial Officer Matt Puckett. Following our prepared remarks, we'll open the call for questions. I'll now hand over to Bracken.

Thanks so much for joining us. I finished 10 months here, and we've made a lot of progress. I'll begin today with a deep dive on our reInvent program and why I'm confident we'll position VF to return to strong, sustainable growth. Then I'll briefly touch on our financial results before turning it over to Martino and Matt. While I've discussed reInvent on our prior calls, I'd like to go a few layers deeper today so you can have a better understanding of how we're approaching this. the progress we've made so far, and what's next. Almost everything is playing out as I expected it would when I took the role. We've taken the tough medicine that we needed to return to growth. Key organizational changes, leadership changes, and strategic moves have largely been executed by the time we get to the end of my first year, and I feel really, really good about them. reInvent, which we introduced back in Q2, is fundamentally how we get back to strong growth. Some perceive this as a simple restructuring plan or tactical steps. It wasn't, and it isn't. reInvent is a blueprint for transforming a company from declining to growing. It has three key phases running in parallel, reset, ignite, and accelerate. Reset is focused on a reset of the US business, VAMS, the cost base, and the balance sheet. Ignite is about elevating how we show up in front of the customer. Here, our focus is on product, design, innovation, and merchandising. On commercial excellence, and brand building. Our reset and ignite phases are occurring in parallel, and together we'll set the stage for the third phase, which will be accelerating growth. Before I get into details on the reset phase, let me talk a little bit about people. No turnaround happens without a strong team, and I've spent an enormous amount of time on this particular area. You have a CEO with a demonstrated turnaround and long-term demonstrated growth experience. And we are adding superstar talent. Our new CHRO is the former CHRO of Salesforce, a company 50 times larger than BF, who also happens to have deep retail and apparel experience. Our new head of strategy and digital was a managing partner at BCG and spent time at Lugo Lemon. Our new head of design was named by McKinsey and others as one of the top creative design leaders in the world. And we announced today Paul Vogel is our new CFO. Paul brings a wide range of financial, operational, and capital markets experience. We plan to announce very soon a new Vans president, and we're promoting strong internal talent, including Rick Martino and our new Timberland president, Nina Flood. By the time I reach my one-year anniversary at VF in July, we'll have almost completely changed the leadership of this company. I have great confidence that we have the right team in place to successfully drive VF's turnaround and long-term growth. Now turning to an update on our key priorities under the reset phase I spoke about earlier. We're on track to deliver our $300 million cost savings target by the middle of the fiscal year, as previously discussed. We're also making progress on reducing debt and strengthening our balance sheet. In the fourth quarter, we delivered another significant reduction in inventories, bringing the total for the year down 23%, down over $500 million, which in turn enables us to reduce our net debt by another $540 million. We also generated over a billion dollars in operating cash flow, and more than $800 million in free cash flow, exceeding the only guidance we gave you earlier. Our strategic portfolio review is complete, and we'll provide an update when we have more views to share. We've established the Americas Regional Platform, which is now fully in place and operational as part of the global commercial organization. Under Martino's strong leadership, we are already seeing signs of progress. We've imported key processors from EMEA and APAC. The accuracy of our forecasting has dramatically improved, and Martina will talk through the actions we're taking to improve the Americas performance in more detail. Let me move to Vans. While overall financial results have not yet improved, we are deep in execution, and we are starting to see very early green shoots. I said you'd start to see the brand turn first in one channel or region, and it would spread to others. It started to happen. With DTC Europe positive in the corner, The inventory reset actions are helping create a cleaner market in which to introduce new product. Our weeks of supply have come down with our partners in all three regions. We're simplifying our product lineup and introducing a sustained level of investment in design and innovation. Ultra Range Neo is performing well in the U.S. The new school, which launched when I first got here, is gaining strength behind enhanced marketing and has now become our second largest style globally. And the A2.0, our newest and best skate shoe, has performed very well in the early months of its launch. You can expect more news here soon, too. This is part of our icon management strategy, which will also reduce reliance on core icons. While the core remains in decline, we're seeing strong performance in our new products and we have a cascade of product launches coming. We're also working to make our marketing efforts more effective. We're simplifying our storytelling. Our marketing has shifted to fewer, deeper campaigns. For example, we used to have 274 stories in one season. When you have 274 stories in six months, you're probably not telling any of them well. We've simplified it to a handful of powerful key stories, concentrating our investment. We're also rebalancing our marketing mix to drive higher ROI. These changes are starting to show positive results. Now we're cutting through. Search is a good leading indicator. We're seeing Google search trends move in the right direction for the first time in years. The last three months have improved compared to the previous 12. We don't only need to have simplification. We also need brand elevation to build brand equity and drive gross margin. We're leveraging our new OTW line as the pinnacle expression of the brand to drive energy and excitement. We're in the middle of a global series of events that bring together community, culture, and fashion that will continue to unfold. That's how we get in the middle of cultural trends. After the tease in June 23rd at Men's Paris Fashion Week, we officially launched OTW at Art Freeze in Los Angeles in February of this year with an amazing installation to drive brand elevation. And just last week, we had an exciting event on the Shanghai Bund that generated huge interest in person and on social media. Stay tuned for more. We have a strong and data-driven approach now to improve our in-store execution. You'll see more as we roll up across the year. I'm a big believer in testing, learning, and scaling, and stores are a wonderful place to do it. We're testing a lot of things across regions and areas of visual merchandising, four-wall formats, and SKU productivity that will scale across the globe over time. At Vans, we've moved from theory to action. Now let's talk about the North Face. Our core focus there has been investing in product, design, and merchandising. Our key growth drivers include category expansion with specific focus on trail and hike, women's, and footwear. We're starting to elevate the brand through premium performance products. Our pinnacle expression of the brand, Summit Series, is leading the way through brand campaigns and in-store activations across all marketplaces. This is connected to elevating our brand journey through new store designs, which are currently being tested and scaled across the globe. A few select examples of these are the Regent Street store experience, our new store format in Berlin and Singapore, and soon we'll have one in Shanghai. Our key global partners are fully involved in this initiative, too. We'll talk more about the final phase, Accelerate, in the coming quarters, but it's too early to talk about it now. So what can you expect as we move into fiscal 25? While we're not ready to give specific quantitative guidance, I can tell you that you can expect that things will be a little bit better sequentially each quarter, except for the first quarter as we complete our channel inventory resets, and Matt will tell you more about that later. To close my section, I'm more confident than ever about our plans and our executions. we will return the company to long-term profitable and sustainable growth. Now let me hand over to Martino, who will give an update on our go-to-market approach globally.