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

Bracken Darrell: Thank you.

Adrienne Yih: Matt yes, thanks. So Matt, excuse me for you. I guess, I’m still a little confused and I may just be not interpreting the comments correctly on the gross margin for the quarter. So there was a benefit from the mix of 80 basis points, but how did the freight and the promotions come through the P&L in Q1, and then how should we think about the shaping of that for the rest of the quarters, knowing that freight is going to turn into a tailwind? That’s number one. And then number two, can you talk about TNF and the timing? So you made a comment that last year, Q2 you couldn’t ship, and then I think didn’t have a lot of inventory and then you did ship in the third quarter Q1s your smallest quarter. So I’m just trying to figure out how we should think about kind of the ebbs and flows of year-on-year changes in the TNF wholesale business. Thank you.

Matt Puckett: Yes, thanks Adrienne. So gross margin, I think you’ve got it in terms of Q1 nice mixed benefit, 80 basis points offset by a couple 100 basis points of negative rates, which is about evenly split between promotions and FX product costs were a bit of a negative, but that was largely offset by pricing. And to your point, and I think the point that I made, product costs are easing as we move through the year on the back of freight in particular, and eventually we think become a modest tailwind certainly in the back half of the year. That’s how I would, characterize that as it relates to the North Face. And I may ask Nicole Otto’s to chime in here on a couple things really around just kind of the, kind of who we are and the trajectory of things, but yes, it there’s some timing issues a little bit between Q2 and Q3 that we’ll navigate.

Last year we were late shipping and so we shipped a little bit more in Q3 versus Q2 than we might normally ship. And the good news is we’re positioned this year to ship in a more optimal way, which is, we’ll work our way through what that means in terms of the results as we get there, but most importantly, it positions us to be on the floor and have those floors set for fall to maximize full price selling. So anything you want to add there, Nicole?

Nicole Otto: No, I just think we had a little bit of a timing issue between Q2 and Q1 and our results. But as you said, we really are going to monitor our operational and sell through performance as we look at Q2 and Q3 together and normalize over the two quarters really trying to hit those key dates for back to school and holiday floor sets with our partners and of course with our D2C business.

Adrienne Yih: Okay, super helpful. Thank you very much. Best of luck.

Nicole Otto: Thank you.

Operator: Thank you. We have reached the end of our question-and-answer session. And with that, that does conclude today’s teleconference. We appreciate your participation. You may disconnect your lines at this time. Enjoy the rest of your day.