Greetings, and welcome to the V.F. Corporation Fourth Quarter and Full Fiscal Year 2021 Earnings Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Mr. Joe Alkire, Vice President of Investor Relations, Corporate Development and Treasury for V.F. Corporation. Thank you. You may begin.

Good morning, and welcome to V.F. Corporation's fourth quarter fiscal 2021 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 morning. We use adjusted constant dollar amounts 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 US 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. During the fourth quarter of 2020, the company determined that the Occupational Workwear business met the held-for-sale and discontinued operations accounting criteria. Accordingly, the company has reported the related assets and liabilities of the Occupational Workwear business in discontinued operations as of the date noted above, and included the operating results of this business in discontinued operations for all periods presented. Unless otherwise noted, results presented on today’s call are based on continuing operations. Joining me on today’s call will be V.F.’s Chairman, President, and Chief Executive Officer, Steve Rendle; and recently appointed Chief Financial Officer, Matt Puckett. Following our prepared remarks, we’ll open the call for questions. Steve?

Thank you, Joe, and good morning, everyone. Welcome to our fourth quarter call. As always, I hope our comments today find you and your loved ones healthy and safe. As we conclude our fiscal 2021 year, I'm proud of the way both VF and our people navigated what turned out to be one of the most disruptive years in our company's 122-year history. We didn't know how the pandemic would unfold, and we didn't know how long it would last. But we did know one thing. We were determined not just to survive the situation, but to capitalize on the moment, emerge even stronger and position VF and our brands for the next chapter of growth and value creation. Thanks to the incredible resilience and agility of our people, combined with our early actions to preserve liquidity and protect our balance sheet. Today, I can say with confidence that VF is indeed emerging from this crisis as a stronger, smarter and more focused enterprise. Throughout fiscal 2021, our teams remain sharply focused on executing their plans, and we continue to invest in our brands' greatest opportunities to drive growth. As you all know, our organic portfolio had strong momentum heading into this crisis, delivering 9% revenue and 19% earnings growth through the first nine months of fiscal 2020. All of the actions we've taken throughout fiscal 2021 have been squarely focused on regaining the strong organic momentum as we exit the pandemic. We also remained focused on driving inorganic growth by evolving our portfolio to align with near and long-term market opportunities. This is exactly what we did by acquiring Supreme in late 2020, which we believe will deliver significant value creation for VF shareholders in the years to come. In addition, we announced late last month that we've entered…

Good morning, everyone. And first, Steve, let me say how honored, excited and appreciative I am to have the opportunity to serve as CFO of this amazing 122-year-old company. And to Scott, thank you for the many years of mentoring and encouraging and supporting my professional development. Rest assured, you've had an impact on VF that is immeasurable, and you will be missed by all but by none, more than me. Best wish is my friend. So, let me start with an overview of the operating environment across geographic regions. Starting with the Americas, the U.S. environment continues to improve with vaccine distribution, easing lockdown measures and a strengthening consumer. We started Q4 with about 15% of our doors closed in the region, mostly in California. As we sit today, virtually all of these doors have reopened. While store traffic remains depressed, conversion and AUR have been strong, and we have seen sequential improvement across the brick-and-mortar fleet with a notable acceleration in March. Each of our largest brands returned to double-digit growth in the Americas, and our total D2C business increased 16%, led by 57% growth from digital. Wholesale channel inventories remained clean, particularly across Outdoor categories, which will provide a strong backdrop to the US wholesale business as we progress through fiscal 2022. In EMEA, the region has been impacted by rolling store closures throughout the entirety of fiscal '21, and our teams continued to navigate this disruption during Q4. We started the quarter with about half of our doors closed and finished the quarter with about 60% of doors closed. Key markets such as the UK and Germany were basically fully closed throughout the fourth quarter. Lockdowns are expected to ease beginning in May for most countries, except Germany and France, although a slower start to vaccine…

Thank you. At this time, we will be conducting a question-and-answer session. [Operator Instructions] Our first question comes from the line of Erinn Murphy with Piper Sandler. Please proceed with your question.

Great. Thanks. Good morning to you all and, Matt, congrats to your appointment as CFO. I guess my question, I guess, for Steve, on Vans. You talked about in your prepared remarks on just some of the context of what gets you back to the long-term algo. Could you share a little bit more about this year specifically? I mean, you guided 7% to 9% versus fiscal 2020. What are some of the levers that you could see that could drive potential upside towards that long-term algo? And then my follow-up is just on the digital growth. As stores have reopened here in April and then into May, what have you seen in digital? Thanks so much.

Good morning, Erinn, and thank you. So Vans, clearly, I hope through our - my remarks in my script, you all noted just the confidence that we have and the momentum that we see building coming out of March into this year. We talked a lot about last year at the outsized impact that Vans incurred from the store closures, but also the disruption in inventory early and the impact on marketing and the ability to really tell those stories. As we think about this year, as those stores reopen, the upside could be very significant. And we know that these are a very powerful part of their connection to their consumers. This is where we really have, I think, a distinct competitive advantage. We have a higher loyalty member engagement. We see higher purchase frequency and a higher order value when our stores are up and running and that is paying off as we see the acceleration coming out of March and April. But you can't discount at all this - kind of this return to some normal usage occasions and the impact that will have on consumers' desire to purchase. We see that today. And then this moved to a 50-week drop - 52-week drop cadence that it's - I think what's significant about that, Erinn, is it could be less about the products that we're putting on in front of you every week because it could be just a story, but it's an engagement moment for us to reach out to our current consumers, attract new consumers and really engage them in the brand's family and drive that long-term consumer loyalty. The digital growth has been very, very important, clearly, in this last year, and it will continue to be. For us, as we - it will moderate for sure. We're not sure where that will land. But I think the critical part for us is how we seamlessly connect our stores with our e-commerce environments and really create that engagement method that we're able to connect with you, communicate with you wherever you are and however you choose to engage with us. And we have a new store in Milan, the Orefici store is a test environment for us on a VF standpoint, using greater digital connectivity, in-store opportunities to engage not only with content, but how we're able to service the consumer with a single view of inventory. We think that, going forward, will be a big advantage as well as we're able to prove it and then roll it out across our fleet. And clearly, Vans would be a big user of that new concept.

Hey, Erinn, this is Matt, and thank you for the shout out, and happy to be here, obviously. I'll add one thing to Steve's comment about Vans that I think the group probably understands. But if you think about the opportunity to see the business come back a little more quickly, especially in brick-and-mortar, we continue to remain disciplined as it relates to how we're supporting the business from an inventory standpoint. But the good news, certainly for Vans is we've got the ability to get back in the inventory pretty quickly there. So, if we see that begin to move a little faster, especially the recovery of the brick-and-mortar side of the business, we'll be able to support that. We’ll able to support some level of upside there given the capabilities that we have relative to lead-time and some of the quick term things that we could do in Vans. So, I think we're really confident in the plan we've laid out. But also if that looks to see a little bit more momentum than maybe what we've initially called, then we'll have the opportunity to get after that as well.

Great. Thank you both.

Thank you, Erinn.

Thank you. Our next question comes from the line of Michael Binetti with Credit Suisse. Please proceed with your question.

Hey, guys. I just wanted to ask you a quick one on the gross margin. I guess in the quarter, just looking at your slides here, 170 basis points of a headwind from rate with 70 coming from FX. So, I think the math there is about 100 basis points from some markdowns in the quarter. I think your inventories are clean, and we've seen pretty good full price selling in the market. So, maybe you could just help us orient to where - if that's right, where you were seeing the markdowns in the quarter? Which of the brands are - maybe how to think through that? And then just as we look ahead to get a little bit of sense of the confidence you have in the gross margin that you guided to for 2022, maybe you could just give us a couple of thoughts on the components that build to it, geography channel, which I think would be headwinds. And then just a quick one on the SG&A. You said there's opportunity for leverage as you get back on your algorithm. I think the September 2019 plan embedded no SG&A leverage. That did sound like a bit of a change to me. If so, maybe just any thoughts on what changed there?

Yes. Michael, good morning. In terms of gross margin, I think first off, I'll take you back to where we started this year. We went into the year, and we said we were going to be really aggressive to end the year in a clean position and end the year in a position of strength. And we've done that. We've executed on our plan really, really well in that regard. What we saw play out in the fourth quarter from a rate perspective as well, honestly, as we've seen play out through the year has been right in line with our expectations. You have to remember, some of the choices that we made even last summer to emerge clean are impacting what you saw play out in the fourth quarter, and we certainly expected that. So no one brand, no one channel driving that. But certainly, the aggressive approach that we took to ending the year clean is a big element of that. The piece that has been more difficult for us to call through the year, honestly, has been the mix. We did end the year with our sort of normal kind of 50 basis point impact on a full year basis from mix, but we've seen some puts and takes there across the year because this has been obviously a really unique year in terms of trying to project and predict the mix of the business, in particular, the brick-and-mortar component of our business as we've seen that be continually disruptive by store closures throughout the year. So I think what you can take away from that is we executed on our plan just as we intended to. And certainly, there's been some variability because of the mix side. But in the end, we ended the year with…

Our next question comes from the line of Adrienne Yih with Barclays. Please proceed with your question.

Thank you for all the details. As always, it's nice to see the Vans' inflection, and my congrats to Matt as well. I guess, one of my questions is, in terms of wholesale bookings and what you're seeing for the fall holiday shipments, given where the inventory is, how are you - how does the bookings look first of all? And are you building in some cushion in weeks of supply? What's the strategy on chase, given that everything we're sharing seems like the supply chain is likely to remain tight through year-end? And then I'll have a follow-up. Thank you very much.

Hi. Adrienne, thank you and good morning. Yes, in terms of our books, I think - yes, first of all, maybe just stepping back a little bit. The environment, I think, is becoming more typical. And certainly, the retailers are buying to support a recovery. In our view, the approach has been prudent. We think the assumptions are realistic and logical. And we're buying right in line with that. We're buying to support the order book. Certainly, there'll be some opportunity to do a little bit more business there, if the business is a little bit stronger. We continue to remain disciplined in our posture. As we talked to you last year, we talked about looking at order books and then cutting that a little bit in terms of our buy. That's not what we're doing now. We're back to a more typical approach, disciplined, as you would expect, that's buying to support the overall business. There will be some supply chain disruption. Certainly, in the near term, there's some headwinds there. However, we've got comforted by the fact that we've got the best supply chain in the industry, and they're working incredibly hard to mitigate and navigate some of the challenges, as they have been, honestly, for the last 12 months. It's been really an interesting time in the supply chain, as we all understand. But we've got a lot of confidence in what we're doing. And right now, as we sit here today, not without some challenges for sure and some headwinds and even some cost pressures, as I mentioned, but our ability to support back-to-school and ultimately the holiday selling season, we're really confident in what we're doing, and we feel that we'll be well positioned there from a marketplace perspective.

And then Matt, my follow-up is on the fiscal 2022, the 50% DTC target, what will be the retail to digital mix on that? And how much of the op margin comes from that sort of structural shift from wholesale to DTC? Thank you very much.

Adrienne, can you say the first part of that question again?

If I got the numbers correctly, I thought fiscal 2022 was going to be penetration of 50% DTC. Is that - and so, my question was, what would be the mix of brick-and-mortar to the digital aspect of DTC within that?

Yes. So we've said - yes, that's good. I got you. So the total DTC business, roughly half. And digital overall will be right around - I think our total owned dot-com will be in the low 20s.

Great.

When you look at our total digital business, including our wholesale partners, our total digital business would be a little over 30%.

Our next question comes from the line of Laurent Vasilescu with Exane BNP Paribas. Please proceed with your question.

Good morning and thanks for having me on the call. And congrats, Matt, with your new responsibilities. I wanted to ask about Supreme. Supreme, up to $600 million. Can you maybe parse out, how you're expecting that to grow on a year-over-year basis or a two-year stack basis? How do we think about seasonality for that $600 million number because I think the brand goes dark twice a year? And Steve, any key learnings that you want to share as you have the name under your fold for the last few months?

Hi Laurent, its Matt. I'll start with a couple of things here on the numbers side. And thank you, by the way. Yes. I mean I would say, first of all, we're really happy with the early performance of Supreme. We mentioned the strong number in our fiscal fourth quarter, which was a little bit ahead of expectations. And we're not going to disclose the pro forma growth rate of Supreme. Well, I'll tell you, the $600 million is a little bit ahead of our expectations. And again, we're really confident in what we're seeing in the early days, both on the topline, but also really through the P&L as well.

And then, Laurent, real quick, this is Steve on what we've learned. Clearly, we're just a little over 100 days into the integration, which is going quite well. I think what we knew going in, and it's just been reaffirmed as we get to know the team better and better is just the rigor that they apply to managing the Supreme brand, the ability and just the approach they take to connecting with their consumers, the weekly drop model, how they mix the different products, just the rigor and deep, deep experience behind the management of the brand and the coordinated effort across the globe, which is what gives us confidence as they begin to understand the VF model and the VF capabilities, that international component that they'll now be able to reach into and leverage against their international growth strategies. We recently opened the Milan store, and you saw just great response from consumers despite limited tourist traffic. They're meeting the normal expected volumes on a weekly basis. So, it's everything that we thought it would be and what we learned through diligence. And we continue to be very confident in the long-term value creation opportunity that Supreme brings to VF and our shareholders.

That's great to hear. And as a follow-up, Timberland, I know it's guided to be comparable to FY 2020. Understand the brand is an undergoing a transition. But you recently brought in Susie Mulder to lead the brand. Can you talk about her vision strategy for the brand? Are you seeing a boot trend emerging around the fall season? Is that a fair assessment and timberland benefit?

Yes. So Susie is, I think, day 33 or 34 and just hit the ground running. Despite having to do that through a Zoom environment, it's interesting to watch new leaders join teams and wrap their arms around the business. But she's coming up to speed very, very quickly. And I would tell you, we don't anticipate any meaningful change to the direction, the strategic reset in the marketplace actions are largely behind us. And I think what you'll see is, she will put her mark on how she looks to engage the team and drive the strategy. But I think, we're really positioned with her leadership for the next phase of growth. The boot trend, I think there is a boot trend for sure, but I think more importantly, there's an outdoor trend, and we're seeing that represented in our sell-through. But the nice thing, Laurent is our growth has been very balanced. And we are not planning to see our Classics business have outsized growth. And I think, in fact, between fiscal 2020 and fiscal 2022, we're planning it to be about flat. But what we are seeing is nice uptick in our Outdoor business; in Apparel; and even more importantly, in Pro. Pro came through this last year posting low single-digit growth and is poised to move to greater growth in fiscal 2022. But you're also seeing us evolve our more lifestyle offering. The Brad Street, True Cloud, Solar Wave built on the Green Stride platform, these are the things that we've been doing in the background to evolve and balance out our product offer. And it's coming with a greater capability. And consumer engagement with our marketing as our new marketing leader comes up to speed and is able to partner with the product team on really telling the stories against that monthly flow of product.

Our next question comes from the line of Camilo Lyon with BTIG. Please proceed with your question.

And Matt, I'll add my welcome to the hot seat. I wanted to first ask about guidance. If you could - there's still a lot of moving parts to the year. It seems like there's more of a replenishment happening at wholesale that could be happening faster than on the typical cadence, supply chain disruptions continued amount. European doors are still closed. Could you give some shape into how you think the year will unfold maybe front half versus back half? I think that would be very helpful. And then I have a follow-up.

Yes, sure. Thank you, Camilo. I think you said it well. It's a really difficult environment to project certainly having it’s better place than we've been as the business is coming back up and consumers are coming back into stores. But certainly, all the things you mentioned are top of mind for us. We expect continued sequential improvement really across the business, in particular, in those parts of the business that where consumers are back shopping in a physical environment. And that's both our own stores as well as our wholesale partners. And we're going to see that continue through the year. I think every quarter, we expect that number to continue to improve. And at the same time, we expect the strength in our digital business to continue, given all the progress that we've seen there and the good work that our teams have done. As it relates to just the numbers themselves, I think we - I'll tell you, we expect our first half revenue growth to be about 50% and EPS about $1.20. So obviously, we're lapping COVID lockdown and have a bit of an inorganic contribution from Supreme as part of that. I'll remind you that our first quarter is always seasonally our smallest quarter of the year. So obviously, that continues. But we do expect Q1 to be about double what it was last year and we do expect to return to profitability in Q1.

That's great color. Thank you for that, Matt. And then, Steve, I wanted to ask on China. If you could just give us some perspective on where the Vans business is today from a size perspective. You talked about it being a $1 billion brand. But maybe just from a - a market penetration perspective and how you see the growth path unfolding there, whether it's on distribution of doors basis or on the tiers of cities basis, anything that could help us understand the runway that you have in front of you? And then any thoughts you could share on Supreme entry in China and when that could happen? Thank you.

Great. So our Vans business, in case - I think it's true for all of our Vans businesses. This is - it's were we have the largest run rate. That’s why we really peg China as one of our strategic growth pillars. Matt, our Vans business there is just around $500 million.

Yes. A little over $500 million, yes.

And it's - what we see is just tremendous opportunity to grow beyond Tier 1 cities into Tier 2, 3 and 4, but also clearly the importance of the digital piece. I think the exciting opportunities in China for us is as our new leader, Winnie, is getting more and more engaged is bringing the consumer engagement skill set that she has from prior roles in CPG and the partnership she has with the Titans, just strengthening what was already a very important part of our go-to-market strategy. She brings the skill and the rigor to make that an even more important part of our strategy and how we use our stores to engage and tell those in-person stories supported by the online component. But I think there's - this is a very important market, not just for Vans, but for every one of our businesses and showed very good growth last year and positioned to continue to have strong double-digit as we go into fiscal 2022.

And then on Supreme in China?

On Supreme, yes. So Supreme, as we get the team engaged with our Asia platform, quite a bit of work is going on and just understanding the model and how can we leverage our skills in region, but more importantly, in China. You won't see anything this year. It will come in probably next year and the year after is where that work will be done. I think the key here, Camilo, is the Supreme's team ability to travel to the marketplace. They spend a tremendous amount of time understanding the consumer, finding their specific consumer and then the store location, which is how we enter markets is such a critical part of how they think about new market penetration. They need to be able to get in market. They need to be able to partner with our teams to begin to understand those key consumer markets and where best to put that first store. And that is one of the big drivers of why it won't be this year, but it will be the years to come.

Our next question comes from the line of Matthew Boss with JPMorgan. Please proceed with your question.

So Steve, a key storyline that you've talked about pretty consistently during the pandemic was market share acceleration at North Face. So maybe could you just help unpack drivers of the 14% to 16% forecast for this year and just overall confidence in growth prospects for North Face as you see moving forward?

Yes. So North Face is really gaining momentum. They're certainly benefiting here from the outdoor trend, but they're also benefiting from the work being done over the last few years to strengthen our product pipeline, strengthen our ability to engage consumers with stronger demand creation. And I think what you see here is really a strong momentum globally, and it's really not just one thing. On Mountain is really setting the tone, and the performance product has seen really good sell-through. And that's driving that Off Mountain lifestyle franchise growth that we see building, it has been growing nicely in Europe. We've seen that now really move its way into Asia, really significant growth in China as that consumer becomes more engaged with the outdoors and the Winter Olympics becomes a big part of the China focus, and we're right in the middle and being able to benefit from that. But we're seeing really strong return to growth here in the U.S. market and really witnessed with the strong holiday sell-through we saw here not only in our own channels, but in wholesale. The disciplined market management, as we clean up distribution, strengthen key wholesale partner relationships and balance the use of our own stores, our own digital platform to drive that On Mountain, Off Mountain story. But I would tell you, we're set up really well for fiscal 2022 and we're expecting mid-teen growth in fiscal 2022 versus prior peak revenue. But even more importantly, we're seeing mid-teen profitability opportunity.

Yes. I'd just add, this is exactly the way we planned it. As we came through this year, our international business has remained incredibly strong, very impressive work that our teams are doing across the globe. And what we saw in the Americas, as we pulled way back on inventory and we talked about creating probably some scarcity in some cases and maybe even surmise revenue, and we knew that would probably happen. And in The North Face's case, it absolutely did. And that positions us really, really well just from a math standpoint as we think about coming back into fall winter next year, leaving this year really clean and really low, in some cases, too low in inventories as we build back and continue that strong sell-through that we've been enjoying. So yes, we're - it's set up nicely.

And then just multiyear, could you just elaborate a little on drivers of the increased confidence to now at a minimum return to the long-term algorithm? So would this be greater revenue growth, higher gross margin mix accretion, or is this the sustained SG&A leverage? And feel free to say all of the above if it's applicable.

Yes. You said it pretty well, maybe. But I think that probably the thing that we're looking at is the confidence that we've had, but the broad-based strength of all the brands. We're coming into the year feeling good about all the big brands, and we're seeing some really nice - albeit smaller basis, really nice numbers in some of the emerging brands as well. So, I think we're confident in that regard. I think just in terms of, again, some of the other pieces, you think about, I think we all recognize and acknowledge that bringing Supreme into the equation and taking Occupational Work out of the equation is a benefit. We also know that outsized growth in digital, outsized growth in China in a back again are going to be a benefit to us. We're in the midst of a COVID recovery. Everything is - not everything is equal in that regard. We will see a continual improvement in our brick-and-mortar business over time and probably even extending into fiscal 2023. So there are puts and takes in there. But when you stack it all up, we feel really good about - as we begin to emerge fully over the next several quarters and looking beyond 2022 into 2023 and 2024, we're really confident in the overall algorithm, and comfortable saying that we're committed to that at a minimum. And I will say we recognize that there's a need to update our LRP, our long-range plan, and we'll do that in the context of the full Investor Day at some point in next calendar year.

Our next question comes from the line of Bob Drbul with Guggenheim Securities. Please proceed with your question.

Two questions for you. I think the first one is, as you go to the weekly drop on Vans, can you talk a little bit about the marketing plans in terms of how you're going to communicate that? And I guess, I think the second question, just off of that marketing overall, where do you see the levels of your marketing spend? Where did they end up this year? And what sort of investments do you foresee in 2022? Thanks.

Good morning, Bob. I'll take the first half, and I'll let Matt pay off to back the second half of your question. So, think the weekly drop, this is something Vans has been very well prepared for. And what you see here is an opportunity for them to take a very deliberate and coordinated effort to pull those stories together. And I think that's just the learning we've taken from this last year, is the need for that more frequent touch to the consumer. And how we'll do that, Bob, in some - often times, it will be a weekly new product story. It could be a new style. It could be a co-lab. It could be a color of an existing franchise, but they'll be very coordinated global launches of these product stories. But there will also be important moments is to engage the consumer, things like we've done with foot-to-bill type engagements where revenue is supporting specialty stores and enforcing the local community connections to advance ads with their consumers. I think how we'll really drive that marketing will certainly be heavily focused towards online, through our own direct engagement, through social channels, through e-mail marketing, the power of the loyalty program that now is above 15 million people and really engaging on opportunities that are unique to that particular consumer that they're able to access due to their loyalty membership will be a very important part. But I think the in-store piece as well, both our stores and our key wholesale partners that coordinated in-store element of the demand creation and the experience linked to that online piece is that really a seamless integration that you hear us talk about and our teams are working diligently on, being able to really sequence that appropriately.

Yes. Bob, good morning. In terms of the numbers, certainly, in fiscal 2021, our marketing levels have come down, both in absolute terms as well as percent of revenue. And it's in a pretty significant way in the first half of the year as we pulled way back and then began to build back in Q3 and then back in Q4, we're back above prior year levels and pretty much in line with historical ratios. We talked about the SG&A increase from 2020 to 2022, and the investments that we're making, $150 million cumulatively, a big piece of that is demand creation. And we're actually returning to levels that are in line and actually probably modestly, slightly higher from a ratio standpoint than what we ran in fiscal '20. We remain focused on the highest ROI activities, very disciplined in our management of the marketing. As we've shifted more towards digital, the good news there is you get really quick reads in terms of the effectiveness of that marketing and the returns that it's driving and the ability to be much more dynamic in your ability to move and move those dollars around against things that are really driving returns. And you can see that certainly much quicker than maybe you could previously. So we're confident that the marketing we spend is going to drive returns. And - but certainly, we're leaning back in to support the strong revenue recovery assumptions we have in our outlook.

And then just like a follow-up question is with the digestion of Supreme and the disposal of the Workwear business, where do you feel like you are on the ability to potentially do another acquisition or get back on that trail? And how would you envision that maybe in terms of the timing in the future? Thanks.

Yes. So well, we've got a lot we're dealing with Supreme in terms of the integration there. We're well - we're past the 100-day mark or even well passed the 100-day mark. So there's work to be done. But I think if you look at the sort of the balance sheet side as we're seeing - as we've returned to sort of more normal EBITDA level this year, we look at our leverage position and the - we're focused on leverage, first and foremost, to bring that leverage back in line, and we've got the ability to do that. We think we're going to exit this year taking into consideration some debt paydown opportunities that leverage back net leverage at 2.5 to 3 times. And so I think pretty quickly, we'll have the ability to do that, Bob. And certainly, M&A remains our number one capital allocation priority. We're committed to our dividend, certainly, but nothing's changed in that result from capital allocation. And we'll be in a position as we move through the back half of this year to begin to be able to think more meaningfully about that.

Thank you. Ladies and gentlemen, our final question this morning comes from the line of Ike Boruchow with Wells Fargo. Please proceed with your question.

Welcome, Matt. Just two quick ones. Is there any more details on the Occupational Work sale price? I'm just kind of curious on that. And then just understanding the markdown component of gross margin this year, on the rate side, clearly, you're planning to capture back a lot of lost margin from last year. But are you planning to get that rate line back above fiscal '20 levels fully? I'm trying to understand how much you're expecting in that 56% to kind of gain back this year? Thanks.

Yes. Sure, Ike. Let me start with the second part of that question. Yes, we expect most of that back. I think there's probably - there's still a little bit of overhang in the way we model the business going forward. But generally speaking, we're pretty much back to normal levels from a rate perspective, as I said, our assumption at the moment. As it relates to the Occupational Work sell, I'm not going to tell you the number. I'll tell you the proceeds will be pretty significant. I think we did get some shaping in the presentation. And we expect to end fiscal '22 with about $2 billion in cash inclusive of these proceeds. So - and other than the dividend, we've not assumed any share repo or debt repayment in our outlook for the fiscal.

Thank you. Ladies and gentlemen, that concludes our question-and-answer session. I'll turn the floor back to Mr. Rendle for any final comments.

Great. Well, thank you, everybody, for joining us. Enjoy the opportunity to walk you through how we navigated last year, and I hope you understand where we're headed next year. I would just tell you that the efforts we put in place, the now and next framework that we've talked about throughout the year has really positioned us well. And the acceleration we see coming through March into fiscal '22 and the broad-based momentum across our 4 big brands, the addition of Supreme, the strength of our international platform, specifically the strength of our China business and the investments that we've made around really connecting those the stronger consumer loyal relationships with the enhanced digital capabilities has positioning us extremely well to accelerate and return to our pre-COVID growth rates. And I would just leave you with this. As we work to complete the Occupational Work divestiture and the integration of Supreme and the investments across our portfolio, we now have an organic portfolio that's capable of delivering the high single-digit revenue in low teens earnings growth on a sustainable basis that we spoke to you about in Beaver Creek. And we look forward to being able to pay that off quarter-by-quarter through the next fiscal year. So, thank you, and we look forward to talking to you all in July.

Thank you. This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.