V.F. Corporation (NYSE:VFC) Q1 2024 Earnings Call Transcript

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And then the product cost eases and actually potentially becomes a little bit of a tailwind in half 2 in terms of what we see and the good news is we have pretty clear visibility now from a cost standpoint all the way through the fiscal year. So those are a couple of points I’d make on margin, but confidence in where we sit today, Laurent, I think is the message I’d want you to take away. And SG&A, certainly when we see revenue under pressure, we’ve got levers we can pull, as we manage our controllable spending. There’s a lot of fixed costs in a business like ours, certainly, but there’s a lot that’s in our control too. There’s discretionary spending that we can pull levers against. We can stop things that we think in the short-term aren’t having a significant impact on what we’re trying to accomplish in executing with the consumer and with our customers.

We’ve done that. We’re working aggressively to optimize things like distribution capacity, I mentioned that, but similar types of things when you think about where revenue is under pressure. How do you kind of rationalize where it makes sense across your footprint and your capacity in different areas. And certainly, things like, just pausing on projects that are longer-term oriented to focus on the near term. And, the benefit there is cost, but also the benefit is focus. And that’s really important to us as well, that we focus on the things that we’ve got to get fixed and we got to get right. And actually it’s kind of a nice as we begin to work with Bracken here too to kind of take a hard look at all those things. And that’s something we’re doing and certainly began to do in Q1 as we pulled back on some spending.

Laurent Vasilescu: Very helpful. Thank you, Matt, for all the color.

Matt Puckett: Yes, you got it, Laurent. Thank you.

Operator: Thank you. Our next questions come from the line of Jay Sole with UBS. Please proceed with your questions.

Jay Sole: Great. Thank you so much. I guess we can talk a little bit more about Vans. I think Kevin Bailey, you’re on the call. If we go back to January, maybe some of the opportunities that you seeing, maybe some of the green shoots, I mean, are those still happening? I mean you talked about some like, some of the newer footwear styles working better, but just give us an overall view of where things stand today with Vans, with the brand and the progress you’re making, turning around the brand that would be very helpful? Thank you.

Kevin Bailey: Yes, Jay, happy to answer. Oh, go ahead, Matt.

Matt Puckett: Kevin, yes, I was just going to say one thing, and then I’ll turn it over to you. And I know and you’ll agree with this. We’re not looking for a quick fix in this business. We’re setting up the brand for long-term profitable growth, and we’re not going to sacrifice that objective. I think that’s really important. And it’s taking longer than we would’ve liked and certainly the results that we saw this quarter, even if it’s what we expected, it’s not good. It was poor, in fact and it’s disappointing to see. But the team is working aggressively against the right things to turn the brand around. And I know you want some details on that, so Kevin, maybe unpack some of the things you’re going after.

Kevin Bailey: Yes, no, thanks Matt. And Jay, you’re spot on. I think as Matt said, certainly we we’re not happy delivering that kind of decline in the quarter. However, it was in line with our expectations as we anticipated that based on order book and what we were seeing a year ago or a little less than a year ago with the order book. But that said, as Matt said, we believe we can execute better and deliver better on our potential. Overall the indicators on the brand remain strong. I think I said at Investor Day, consumers were really the piece that we needed to put at the front of our decision making. And we’re still seeing stable considerations, strong sentiment scores. Matt referenced our loyalty program; it’s two times its size of two years ago, so that part of its solid.

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