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

Ike Boruchow: Hey thanks for taking the question. Matt, maybe can you just help me with two questions, first on Dickies the decline you saw in the quarter, just how surprising was that versus your plan? Can you talk a little bit more about what’s going in from a selling perspective to the mass channel over the last couple months? And then is there any update on the PAX [ph] business? Is this still something that you guys are expecting to divest at some point this year? Just kind of looking for an update there, thanks.

Matt Puckett: Yes, thanks Ike. I do think I get to take both of those. I say Dickies was disappointing in the quarter, didn’t meet our expectations. I think just to be frank, the business continues to be impacted by soft results in the Americas and in that work channel sell through is falling short of expectations. I think we’ve continued to see kind of outsize impacts from some of the challenges in the marketplace that are impacting, that value in consumer a little more stowed than what we’re seeing in other parts of our business. If there’s a bright spot to some degree, our inventory positions are now in a pretty good place. In particular, our largest account, they’re in a better place. And, if sell through improves across the pad, and certainly for us, for Dickies we’re in a position that we can capitalize on that and we’ll, we’ll see a nice replenishment pop at some stage.

But to date the underlying sell through has continued to be short of our expectations. Europe continues to grow. I think that’s another thing and driven by the lifestyle part of the business that’s been important to us. But ultimately we’ve got to, we’ve got work to do here to improve that basic work business in the U.S. and ensure we’re driving that business effectively. And so that’s a big focus of the team today. As it relates to Pax, first off the business continues to perform well if anything’s a little better in Q1 than we anticipated, and it’s set up for a really good back to school. We remember we grew the top line nicely last year across the year top and bottom line, and that continued into Q1. These brands continued to kind of have momentum and benefit from, consumer trends.

But I’d be remiss if they didn’t say how happy and proud I am of the team and the work that they’re doing, not easy environment when you know, kind of what’s going on around them with all the conversation that you ask about is happening. And they continue to do amazing work in that regard. So really impressed by what’s happening there. The process is continuing, it takes time. There’s a lot of interest. We’re progressing discussions with a number of parties and we’ll be disciplined in the deal making, especially in light of who the business is. The results are good. We’re generating good growth. We’re generating, strengthening EBITDA and, acknowledging where the capital markets are today. We’re just not going to accept the valuation we’re not comfortable with.

And until we find the right buyer for these brands at a valuation that we’re happy with, we’ll continue to be very discerning. So that’s kind of the update I’d give you there.

Ike Boruchow: Thanks Matt. And just one more quick one on Vans in the back half I know you’ve been asked this a few different ways, but I believe in May you had said you expected to return to growth in the back half, and I believe your comments today were moderate the declines. I’m just, do you expect Vans to be growing in any quarter of this year, or should we now start to think about next year, when the business potentially influx the top line?