V.F. Corporation

Ladies and gentlemen, thank you for joining us and welcome to the VF Corporation fourth quarter and full year fiscal 26 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 in to today's call, please press star 9 to raise your hand and star 6 to unmute.

i will now hand the conference over to allegra perry vice president of investor relations please go ahead hello everyone coming to you live from vans headquarters in sunny southern california welcome to vf corporations fourth quarter fiscal 2026 conference call on today's call we will make forward-looking statements these statements are based on current expectations and are subject to uncertainties that could actually 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 was posted this morning on our investor relations website. We use those as 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 U.S. 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. Joining me on today's call are VF's President and Chief Executive Officer Bracken Darrell, EVP and Chief Operating Officer Abhishek Damya, and EVP and Chief Financial Officer Paul Vogel. Following our prepared remarks, we'll open the call for your questions. I'll now hand over to Bracken.

Well, Allegra, I've got to correct you. It's not sunny here. It's 5 o'clock in the morning, let's be honest. Although it always feels sunny in California, and we had a pretty sunny quarter. Thanks, Allegra. everybody everybody thank you for joining the call we finished this year strong exceeded our fourth quarter guide and took another big step towards transforming vf we returned to sales growth for the year for the first time in three years our portfolio is getting healthier in fiscal year 2024 taking it back away including dickies 43 of our business was growing now as we finish fiscal year 26 70 of our business is growing We also expanded operating margins to 7% in fiscal year 26. But to remind you, that's an expansion of 220 basis points over the 4.8% we had in fiscal 24, including Dickies. Over the last three years, we've paid off over half of our net debt, excluding lease liabilities. Let me repeat that. Over half of our net debt is paid off, excluding lease liabilities. Net debt has dropped from 5.8 billion to 2.7 billion. As a result, We've dropped our leverage from 5.1 times to two times, a full two turns in two years. A lot of strong progress on growth, on cost, and on the balance sheet. We've strengthened our financial position while we've increased our investment in brand building, product creation, and ultimately in growth, which is what it's all about. Our results demonstrate that our strategy is working, that we're well on track with VS Transformation. I'm very confident in our ability to drive strong performance and shareholder value in the years ahead. Now let me turn briefly to Q4. We delivered our strongest revenue performance in three years, with revenue up 3% versus last year, ahead of our expectations and despite an evolving macro environment. In the Americas, our largest market, we accelerated growth to 10%, including a return to growth for vans for the first time in almost four years. Our revenue performance helped drive stronger-than-anticipated operating income of $54 million. But we ended the fiscal year with a strong Q4, growing revenue, and expanding margins while further strengthening our balance sheet. Now let me talk just about a few brand highlights for the quarter. We're continuing to see progress across the portfolio, starting with the North Face. The brand grew 7%, driven by broad-based growth across categories and by stellar performance in the Americas, up 16%. Our investments in product creation and innovation are delivering results. Softshells and fleece were key drivers in apparel. Our investment in footwear is showing strong results or continues to, and in fact, we have now delivered five consecutive double-digit quarters. Finally, we made an exciting announcement last week, which I hope you saw, which further underlines the performance credentials of this brand. we announced a new multi-year strategic partnership for the North Face with the U.S. ski and snowboard team. In other words, we'll be outfitting the U.S. ski and snowboard athletes as they compete on the world stage, including at the upcoming Winter Olympic Games. As the exclusive performance apparel sponsor, athletes will wear North Face across all major events, including the World Cup, all World Cup events, and of course the Olympic Winter Games and official training camps through at least 2034. Of course, our customers can also buy this apparel, and we're sure they will. The brand will be front and center on the world stage, further cementing its commitment to elite mountain and adventure sport athletes. This is an exciting time for the North Face, and we're making progress on our path to doubling this business over time. There are so many ways we can grow this brand. Category growth, market share growth, new categories we can expand into, and finally, elevation to more premium versions of the products we already sell at higher price points. We have a lot of pin-up opportunity to drive growth at the North Face. Let's turn now to Timberland, which grew 2% this quarter, as expected. Our DTC growth was up 8%, driven in part by full-price stores. Wholesale was slightly down versus last year, primarily due to lower distress sales. The 6-inch premium boot continues to be the key engine behind the brand's momentum. We're also seeing good results from Boatshoe, which is growing across all regions with significant growth potential ahead. We'll continue to both build on the strength of the iconic boot, but also introduce more innovation across the rest of our footwear assortment. And starting this fall, we're resetting our apparel proposition to create a better head-to-toe expression that matches our footwear offering. As part of these efforts, we're also focusing on our women's business, and you'll see more there, too. We're driving the brand's energy and leveraging its cultural relevancy through collaboration, seeding, and partnerships. We're continuing to see positive brand search interest in the U.S. and the U.K. More recently in April, Timberlake was awarded the Fashion Maverick Award of the Year at the American Image Awards. We also, as you know, are expanding our distribution footprint with 11 full-price stores now open and operating in our home market. The outsized productivity shown by our new stores are early proof points of our new operating model working as planned. We have exciting plans for Timberland in the coming seasons as we continue to set the stage for long-term profitable growth ahead. This brand could become much larger over time, and I'm confident we're taking the right strategic steps to ensure that happens. Now let's talk about Altra. Altra had an exceptional Q4 performance. Another fifth consecutive quarter, so the fifth consecutive quarter of double-digit growth here, too, across all regions and channels. Revenue grew 45%, driven by broad-based growth everywhere and new launches. Growth for the year was over 30%, with revenue surpassing $270 million. Performance was led by successful franchise launches, including the original Loan Peak, now the Loan Peak 9, and the experience, and strong execution in both TTC and wholesale. We have a really differentiated product in this space, and we're continuing to drive awareness, which remains very low. I talked about investing in product creation and marketing, and Altra is a brand where we have absolutely increased the investment to drive growth. We're excited to see outsized growth in search interest, traffic, and new consumer acquisition. This brand plays in a very large addressable market, and we believe this can be a billion-dollar-plus brand over time. There's so much opportunity here. Now let's talk about Vans. Q4 was down globally by 5% year over year. What I'm most excited about, by far, is our progress in America's DTC. Remember, DTC is where we are closest to the consumer with our products and our marketing. America's is more than 50% of our total business, and it's where the trends start for Vans. If you remember, our e-com business in the Americas first turned to growth in Q3 of 26 with 4% growth. Then in Q4, America's total DTC grew 5%. Americas is the foundation for the brand's energy. This is where we said the recovery would start, and as the Americas DTC continues to grow, its brand heat will start to show up elsewhere. These tangible green shoots are a result of our focus on product and brand energy advance. You'll hear Abhishek talk more on the work we're doing on speed to market, which helps us with newness. Newness continues to build across the assortment as we re-energize our core icons, one silhouette at a time. As an example, the pearlized drops are having great consumer response and driving improving results within the old-school franchise. Another icon, the authentic, delivered outstanding growth in the quarter, up 80% versus last year, and slip-ons returned to growth, too. Apparel also returned to growth in Q4. Bands continued to leverage a social-first, culture-led marketing approach, amplifying product stories and driving traffic, particularly into digital channels. During our fourth quarter, we launched our off-the-wall campaign, anchored around the authentic, and it resonated with consumers and supported improved search and engagement trends in key markets. Our strategic investments in design, brand energy, and demand creation have been instrumental in driving improved performance for the brand. We are excited about the progress at Vans. Turning to fiscal year 27, Paul will go deeper in a minute. I feel very good about our forecasting abilities, and today we're reinstating annual guidance. We're expecting our second consecutive year of growth and strong progress towards our 10% operating margin medium-term goal. I also understand better the seasonality of our business today, especially because on wholesale order flows and the mix of our business, based on the wholesale order flows and the mix of our business quarter by quarter. As you'll hear from Paul, we expect Q1 revenue to be down slightly, low single digits. Remember, it's a very small quarter for the year, and it has no impact on our ability to deliver our guidance for the year. With respect to VANS, first let me say that for the full year, we're going to move from a double-digit decline last year to a mid-single-digit decline this year. The more important signal is that we will continue to deliver growth in America's DTC throughout fiscal year 27. Overall, the front half will be weaker than the back half. Wholesale will start weaker and pick up steam as the DTC growth drives order flow. We still have work to do in our wholesale business in the U.S. and around the world. We'll be focusing on continuing to accelerate in DTC and developing a stronger global wholesale growth engine. In the near term, as Avishak and Paul will also tell you in a minute, we're operating in an unusual macro environment with two wars, at least, and tariffs in flux. Like others in our sector, we're impacted by the developments in the Middle East. Despite these headwinds, we're on track to deliver our medium-term targets. Important, I'd like to emphasize our confidence in getting to the 10% margins we promised. And now we've returned to growth in fiscal year 26, and we'll grow again in 27, and we're not going back. We're shifting our initial turnaround phase to our growth phase. So this next part of our story is all about driving durable, profitable growth for many years to come. Overall, looking ahead through fiscal year 27, just like looking back on the past two years, you'll see more growth, better margins, lower debt, and better leverage in the coming years. Today, I've asked our Chief Operating Officer, Abhishek Dalmi, to provide an update on our turnaround strategy a year on from our last Investor Day. We've really accomplished a ton over the last year, and all these building blocks are contributing to both near-term success and will contribute to a lot more as we move forward. So Abhishek, welcome to the earnings call. The floor is yours.