Greetings, and welcome to the Second Quarter Fiscal 2024 VF Corporation Earnings Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Allegra Perry, Vice President of Investor Relations. Thank you, Allegra. You may begin.

Good afternoon, and welcome to VF Corporation's second quarter fiscal 2024 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 afternoon, and which we use 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 U.S. 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. Joining me on the call will be VF's President and Chief Executive Officer, Bracken Darrell; and EVP and Chief Financial Officer, Matt Puckett. Following our prepared remarks, we'll open the call for questions. I'll now hand over to Bracken.

Good afternoon, everyone. I'm excited to be here for my first quarterly call. I'll start us off, and then Matt will cover Q2 and other financial aspects of the comments I'm about to make. Having now been here for over 100 days, I've had a chance to go far and wide within the company and outside of it. I've talked to employees, customers, wholesalers, investors, analysts, and more. There is a universal desire for VF to be successful again. It's been exciting to hear the power of our brands and appreciate the consistent performances of our international business as well as the North Face. And it was also important for me to hear firsthand where the biggest issues are including in the U.S. and Vans. I've come too many conclusions about the organization, business and opportunities we have. Most importantly, I've gained conviction about what we need to do next and have begun to see how we could evolve the Company longer-term into a new kind of brand builder and innovator. I'll save that last part for another day. Before I go into our plans, I want to mention that I'm struck by the parallels between VF and my former company when I first started there 11 years ago. It too required to turnaround. Turnarounds have many consistent features and similar themes that are always key focus areas in the beginning that evolve over time. The seriousness of the situation gives you a sense of urgency and a desire to move quickly on key steps. Our biggest business is declining. The U.S. isn't working well. The innovation engine has historically been strong but has drifted downward over the past few years. Employees still love the brands and business. But the morale has been hurt by the poor performance and costs…

Thank you, Bracken. It's great that you're here with us as together we face this challenging and critical time in our company's history. Despite these difficult circumstances, I'm energized and positive about the future and the plans that we're laying out today to strengthen our financial position, to improve our operating performance, and to position VF to achieve its full potential. Now let me turn to the results of the quarter. Q2 remained weak overall as bright spots in the North Face and international markets continued to be outweighed by declines in Vans and in our Americas business. That said, we delivered on our commitment to reduce inventory versus last year and paid down €850 million term debt in September ending the quarter with liquidity of $1.7 billion and net leverage of 4.5 times, slightly ahead of our plans mid-year. Revenue for the quarter was down 4% overall, in line with our near-term expectations, but disappointingly reflecting continued weakness in the U.S. business and in Vans globally, two areas we were not making the anticipated progress. As indicated last quarter, Q2 revenue benefited from a change in shipment timing, particularly at the North Face and importantly, we have delivered more consistently on time this year and are lapping late deliveries from last year that fell into Q3. Normalizing for this change in shipment timing which benefited the quarter by a couple of points, overall, Q2 momentum had a relatively similar trajectory to Q1. By region, the Americas was down 11% in the quarter as results continued to be pressured by wholesale as expected. D2C saw an outsized impact from Vans' underperformance. Excluding Vans, America's DTC was up 5% in the quarter, with all brands except Vans and Timberland recording positive performances. EMEA returned to growth up 6% achieving its first…

[Operator Instructions] Thank you. Our first question is from Laurent Vasilescu with BNP Paribas. Please proceed with your question.

Good afternoon.

Hello, Laurent.

Hi, Bracken. Good afternoon, thank you very much for taking the question. And also thank you for the - for your initial thoughts, 100 days in. Bracken, on that, as you get a chance to get closer to the North Face brand, is that you saw in the softer September that changes your view, the direction where the brand is headed as long-term potential?

No, not at all. Actually, I'm really excited about the North Face brand. I think the brand business team kind of across the board, you know, I have - you know, let's say that we all live through the warmest September on record, I think, in the first half of October look like that now. But my way into work to that was absolutely freezing but only because my hands were exposed because I was wearing a North Face jacket. So I have a feeling, sales are going to pick up. And I just did a big review of all our products with Nicole, who runs - Nicole Otto who runs that business and her team, and I couldn't be any more excited about it.

That's good to hear. And then maybe a question for Matt, you know, in the sense that you're pulling the guide but you're talking about hitting numbers that you are guiding to, that $600 million of free cash flow. Can you maybe just - I know you don't guide, Matt, by quarter, but how do we think about the shape of the free cash flow between the third and fourth quarter? And then maybe, Bracken, if you can just talk about the $300 million of cost savings, where is that going to go in terms of - is that coming from marketing? I think marketing was 7.4% of sales. Is that the right number for this year and beyond? Any shape on the cost savings and where it's coming from would be very helpful.

Yes. So hi, Laurent, on the $300 million or the reduction in the cash flow, but really, your question is what's cash is going to look like over the next couple of quarters. I think Q3 will be a pretty strong cash-generating quarter because it's a heavy direct-to-consumer business with a really short cash conversion cycle, right? So that's one thing. Inventories will continue to come down. Good progress in Q2. That will continue as we move through the back half of the year. kind of equally probably between Q3 and Q4 from an inventory and working capital perspective. But I would say our cash generation overall will be a little more distorted towards Q3 versus Q4, as it typically is.

And on the cost reduction, first of all, where is it coming from? You know, this is the - this is going to be a very comprehensive cost reduction program. So it's really going to touch virtually every area of fixed cost. But I just want to make sure I said this in the opening remarks, and I want to reiterate, but we will be reinvesting back part of that back into brand building to marketing and into innovation. Your question - your specific question was, what's the - what ratio or percentage should we expect? I'm not ready to declare that yet. But I know one thing is for sure, this is a business built on amazing products and amazing brands. And so we're going to make sure we're investing at the right level on that. We'll come back later in the year as we head into next year with real clear principles on how much we're investing in those different areas.

Very helpful. Thank you very much.

Thanks, Laurent.

Thank you. Our next question is from Ike Boruchow with Wells Fargo. Please proceed with your question.

Hi, Ike.

Hi, guys, how are you? I guess I wanted to - similar to, Laurent, kind of want to focus on North Face. Just maybe, Matt, this is for you. Just to understand a little bit more about the comment about 3Q being down. So direct-to-consumer slowed in September, I think you said it was up two, but it sounds like you know, things are getting cooler, not warmer. Should direct-to-consumer continue to slow, like should we expect direct-to-consumer to also be negative? Or is this more of a dynamic that has to do with the wholesale channel? I don't mean to get so granular. I'm just kind of curious because I was surprised to hear that the brand could be negative.

Yes. I'll keep this simple, Ike. It's really a wholesale issue in the quarter and it's timing, but it's also the order book itself, which is nothing new. We've talked about that for a couple of quarters. DTC, we expect to grow in the quarter.

Got it. And then a quick follow-up. You had talked about choppier U.S. wholesale, makes sense, and you also talked a little bit about seeing some of that pressure overseas in Europe. Could you just elaborate a little bit more, Matt, maybe is that broad-based? Is it more specific to one of the brands? I was kind of curious to learn a little bit more.

Yes. I mean I would say, yes, first of all, our Europe business continues to perform well and we expect it to continue to perform well. And it's far and away kind of the smallest, I would say, impact of how we're seeing the second half of the business evolve as what's going on in Europe. But I think it's fair to say the macro is a little bit tougher. I mean there's a lot going on there from a geopolitical standpoint, consumer sentiment remains pretty difficult, pretty - a lot of caution being deployed there. Maybe a little more so in the U.K. is what we're seeing. So I would say it's kind of across the business, but it's not significantly impactful. And what I would also have a lot of confidence in saying is that our business there and our platform and the go-to-market strategy. we're going to win whatever the environment is. We just think the environment is going to be a little bit tougher in the short term.

Thank you.

Thank you.

Thank you. Our next question is from Lorraine Hutchinson with Bank of America. Please proceed with your question.

Hi, Lorraine.

Good afternoon. Hi. Bracken, I'm interested in hearing the initial steps that you're taking to first stabilize and then grow the Vans business.

Well, first of all, yes, there's a turnaround plan in place, which I think you've been exposed to before and those steps continue. So my game plan is really to step in until we bring in a new brands - new brand President and really accelerate and then make some select changes. I don't plan to undo a whole bunch of things. I think the steps we put in place are the right ones. I'd just like to see it happen faster. There are a few things we are changing. You know, this change in North America is a change in our approach to the Vans business. And the biggest problem we've had because the biggest part of the business for Vans is in the U.S., is - it's to address that very directly and quickly. And beyond that, I'll come back to you and tell you when I think I've got something to say. But right now, I'd say just stay tuned.

Thank you very much.

Thank you.

Thank you. Our next question is from Brooke Roach with Goldman Sachs. Please proceed with your question.

Hi, Brooke.

Hi, Bracken. Thanks so much for taking the question.

Thank you.

I was wondering if we could follow up on Lorraine's question, and get your thoughts and perspective on what attributes you're looking for in a new brand president at Vans. And what might be the right leadership attributes to drive that stabilization and turnaround there?

Well, you know, I'm always - you know, my - the most important quality of a leader at this level is always leadership. You know, so just general leadership. But the next step down from that, if you're looking at real capabilities, I think I tried to be very clear in my opening, I believe, the most important attributes of a leader for a brand or a brand President is being able to lead an innovation process and to consistently deliver an amazing set of innovations over time. And the segment is to build brand heat, you know, real brand power in the marketplace. And so those are the - those are two probably the top two scales we'll be looking for.

Great. And if I could just ask one follow-up question. VF has historically had a few lenses by which they elaborate - they look at ownership of brands in the portfolio. Can you elaborate on how you're thinking about the broader portfolio composition of VF today and whether or not those strategic lenses of ownership are still appropriate under your leadership?

Yes. You know, I've been through those lenses and I like them a lot. I think it's a great way to look at it. I never heard him called lenses. I've heard him call it about everything else. But I think that's the right way to think about you know, strategy first and then you know, return on investment to various pieces. And - but I guess the most important thing to me, you know, maybe precedes a little bit of that and fits into the strategy lens is, I love to be in growing markets. I mean I think that's the whole key. And so as I think about the portfolio we're in, and this company has - as updated and changed and altered its portfolio over 124 years, a remarkable number of times, 121 years again, that's the way I'm thinking about. I like to be in growing markets. I like to have leading brands.

We turn to 125 next year.

125. Okay, good. So there will be a big party.

Yes, exactly.

Thank you. See you, Brooke.

Thank you. Our next question is from Simeon Siegel with BMO Capital Markets. Please proceed with your question.

Hi, Simeon.

Hi, everyone. Hi, good afternoon. So I guess I was wondering, just first off, any way to think through how much of the Americas wholesale decline was company-specific versus the broader environment? I mean, obviously, you guys are speaking to your challenges, but there's stuff out there also. So just curious if you have a view there. And then any thoughts on that environment going forward? And then just any - I'm sorry if I missed it, do you guys give any notable one-time cash or working capital items built into the free cash flow reduction? Or was that mostly just the lower income? Thanks, guys.

Thank you.

Yes. So let me try to take those. In terms of our wholesale performance, I'd suggest certainly the macro is impactful, but some of these are our issues, right? The Vans issues, I think, are very specific to us. We've seen a little bit of a weakness in sell-through in parts of the Timberland business, particularly the six-inch boot, the premium boot has been slower. Now you could argue, you know, lots of reasons as to why that might be externally driven, but we own it. You know, Dickies has continued to be a bit softer than we would have expected. I think that's, in many ways, the marketplace itself, but we have to be better at creating demand. So we own all these things. The North Face is really strong. by the way, as are the rest of the outdoor emerging brands. So I think it's a combination of both as it relates to you know, what's happening in the U.S. wholesale business, particularly. And by the way, you know, one of the biggest reasons that the changes we're announcing today from an operating model perspective are so critical to us. You know, one of the biggest - the first point that Bracken made is fix the U.S. business, and that, by and large, starts with the wholesale business in a big way. So that's one. As it relates to the change in free cash flow, that's really primarily the operating results and updates in working capital. Right now, we haven't yet talked about the specific cash impacts of Reinvent. There will be some charges that we'll take over the next couple of quarters, which will include both cash and noncash charges. We're not ready to talk about the specifics and details of those today, but that will come. I will tell you, as it relates to the year-end liquidity number that we've guided to, we think we've captured all that very effectively.

Great. All right. Thanks a lot. Best of luck for the rest of the year, and looking forward to see you soon.

Thanks, Simeon.

Thank you. Our next call from Jim Duffy with Stifel. Please proceed with your question.

Hi, Jim.

Good afternoon. Bracken, I was hoping you could speak for a moment about your vision for the organizational structure. The establishment of the commercial organization seems like an incremental layer to the structure, at least in North America. Are there layers within the organizational structure to be streamlined to speed efficiency that will coincide with this?

Yes. If you think about it, we're running, like, effectively five different North America organizations today for the various brands and that includes quite a bit of duplication. And while you'll have one person over that now, we should get consolidation of some of it underneath it. So - and I expect it to be a much more efficient approach. It will also make sure that you know, we're really good at executing in stores. And one brand, we'll move that quickly into the others where we're doing it in Europe, it will come into the U.S. So I just see this as a win-win.

Great. Thank you.

Thank you. Thanks, Jim.

Thank you. Our next call is from Janine Stichter with BTIG. Please proceed with your question.

Hi, Janine.

Hi, everyone. Good afternoon. Hi, Bracken. Wanted to ask more about the timeline for the change at Vans. It sounds like the playbook that's been in place is still very much there, but now there's just more of a sense of urgency. Wanted to understand how much of the pace of change can be done by things that are organizational or internal? And then if there's anything that can be done in terms of the lead times in the product pipeline, my understanding is that it's always been somewhat of a longer lead time brand, I think, around 18 months. So anything that can be done just to get the product to market quicker? Thank you.

Yes. Thanks for asking that, Janine. There is that - just a reality of this market of this business that there are certain time lines to bring products to market, especially shoes, footwear it is what it is, although parts of that footwear business can come to market faster than most. So I'm not going to commit to you that we're going to suddenly accelerate all the lead times to market, at least not yet, although I think that's a very worthy goal. But I do think there are other things we can do to execute better and probably do that a little faster. And one of them is an outcome of what we announced today, having one commercial organization that just moves with the cadence in a process that rolls across our entire business and takes the best practice in places that are -- where we're really performing well in vans and brings it into the U.S. market, I think, can help. So - as I said, stay tuned. There's a lot of work to do on Vans, but I'm really, really excited about it, and I'm excited about getting in the middle of it, and I love the team over there. So, I think it's going to be - we'll be - I'm sure we'll be talking about this every quarter.

Great. That's helpful. And then if I could just ask a follow-up. We noticed some of the changes on the classics. I was wondering if that change helps or at all if you've seen anything there? And just how to size up the magnitude of how broad that price change was?

Yes, it has. It's been pretty broad across certain classic styles. It was about $5 in four different styles. And I think it was really to try to just reset - Vans - those Vans Classic also were always a good value. And I think we're in an economy where our value matters. So we did see a lift. I don't think it was broad enough to really notice from our P&L standpoint, but I think it sets the stage for having us be the right kind of price point. And we're not just one price more. So you also have the ability to trade up and down from there, but mainly up. Do you want to add anything to that, Matt?

No. I think you got it, Bracken. I mean we've seen a little bit of uplift in terms of the sell-through velocity on the back of that. But it's a few weeks in. It's relatively - at this stage, hasn't changed the overall outcome, all that materially. But ultimately, it's the right thing to do in our view in terms of the opportunity to increase velocity. And it will also help us clear through some inventory a little more quickly, which is an important aspect, of what we need to do in the wholesale channel as well.

Perfect. Thanks so much.

Thanks, Janine.

Thank you. Our next question is from John Kernan with TD. Please proceed with your question.

Hi John.

Excellent. Thanks for taking my question. Hi Bracken. To go back into the Vans turnaround, obviously, there's going to be some new leadership that you bring in. But how do we think about the top line and the margin opportunity? Are there points of distribution that needs to be shut down? I know there's is around 730 stores. There's quite a few wholesale partners globally, particularly in the U.S. How should we think about managing the top line and also the margin?

Yes. I think there's always cleaning up to do, especially when the business is in ahead a decline period, you always have to go through and clean up the excess distribution, let's say, we are shutting down stores. We've shut down - I don't know the exact number, Matt may have top of his head, we have absolutely shut down stores, and we - and that's a weed and feed process all the time. We're actually opening some stores, but we're also shutting down more. And I think from a wholesale distribution standpoint, I don't think there's anything specific I would point to. But we're going to continue to evaluate the distribution. It's obviously such a critical part of this business. But I don't think those are really the answer. I think the real answer is we need great innovation and great execution.

Got it….

John, I would just add real quickly here. Yes, there is opportunity, and we will drive higher profitability in this business. As we stabilize the business and begin to grow it again. Doing a lot of work on the cost structure. You can imagine within that $300 million Vans' impacted there, given it's a really big business, and there are places in that business, where the cost structure is a little bit out of whack given what we've seen in the declines store closures, capacity in certain parts of the business, et cetera. So, we're going to improve, the profitability of that business. As we stabilize it, gross margins will stabilize. There's still a really high gross margin structure business. And as we begin to grow off of a right-sized cost structure, we're going to have the ability, to drive a lot of profitability relatively quickly back into that business, because we certainly lost a lot.

Understood, Matt. Maybe one quick follow-up for you just on the capital structure. How should we think about the refinancings in the next couple of years and debt paydown? And obviously, we saw the dividend announcement today that does free up some cash. So, how should we think about your approach to the capital structure?

Yes. So actually, I'm glad you asked that question. Deleveraging, we can't say it enough. It's paying down debt and deleveraging is our number one financial priority. And our target hasn't changed. 2.5 times gross leverage is our target. And we're going to make substantive progress against that over the next couple of years. The actions we've announced today, specifically the cost reduction, which will generate cash, also improve EBITDA as well as the benefit of the dividend reduction, which is $325 million. Both of those things put us in a better position to address those things. I would tell you, as we sit here today, our plan and I've got a lot of confidence in our ability to do this, also when you factor in the work that we're doing to sell the PACS [ph] business is to pay-off the next couple of tranches of debt and not refinance those. That's about $1.750 billion that's due over the next 18 months, and that's our expectation.

Excellent. Thank you.

Thanks, John.

Thank you. Our next question is from Dana Telsey with the Telsey Advisory Group. Please proceed with your question.

Hi, Dana.

Hi. Good afternoon. Hello Bracken and hi. As you think about wholesale, which has been one of the challenged parts of the business, in your big picture view, how do you think about what percentage of the business do you want it versus DTC? And does it differ by brand? And then when you're thinking about fixing the U.S. what are the markers that we should be thinking about watching as we go through the next year or so to say that it's on track, so to speak? Thank you.

Well, I probably won't throw out a specific number. I'll just say I think wholesale is super important in this business. And as much as I love DTC, and we all do, I think the pendulum for a lot of companies in this industry, is long too far over. And there's a reason why wholesale, is in the marketplace in place with outsized for all of us, because consumers like to buy it that way a lot of this time. So as I've met with several of the CEOs of our wholesale partners, in the U.S. and in Europe, I've been really impressed by their plans and by their capability. And I fully intend for us to cater to them effectively, which doesn't mean we won't be investing in DTC, we will. So, if you read between the lines, that means also it would be a really important part of this business. Your second question was on markers.

On the U.S. marker, yes?

Yes, I think, yes - one of the key markers. I mean I think they're the ones that you expect to see. I think you just - will be looking - like you will, we're going to be looking very carefully at sales, but on a very short-term basis. So, we're going to keep an eye on that as we start to execute, I would expect our revenues to get better. And when we really fully operational, it will take us a little while to get that in place, but I expect improvement.

Thank you.

Thank you.

Thank you. Our next question is from Paul Lejuez with Citigroup. Please proceed with your question.

Hi, Paul.

Hi, thanks guys. Hi Bracken. So you talked a bit about how the current VF turnaround is similar and share certain characteristics that, are similar to your prior turnarounds. But I'm also curious, to hear how you view this as different, what's unique? And what does that mean in terms of how you tackle it? Thanks.

Yes. I think one of the differences is it takes a long - too long to develop products in this business, in this industry, actually, a lot longer than I would have expected, before I started researching it. I obviously knew that before I came here, but I was surprised back during the early stages of kind of trying to work to understand what VF is all about, while I was in the energy process. How long it takes in this industry to develop footwear and even apparel. So, I think that is quite a difference. There's also - there's this valuing that happens in this industry that's new to me, which we call seasons where you sell a season in and somebody's got to decide they want to buy that season and then you see how it does. And those are two key differences in this industry, but they're not major. I mean, they're significant in times of the way we - our process operates. But they don't really fundamentally change, the way I think about the business. It's still the same business, which is create great innovation. Some of it - most of it moderate level of innovation that keeps things fresh and new. Some of it really dramatic and innovative and then make sure that consumers love, what you're all about, very values-driven. And so, there are a lot more parallels than differences, kind of 5:1 or 6:1 or something.

Got it. Thank you. Good luck.

Thanks, Paul.

Thank you. Our next question is from Gaby Carbone with Deutsche Bank. Please proceed with your question.

Good afternoon. Thanks for taking my question.

Hi, Gaby.

Hi, how are you? So, I understand you withdrawing guidance, but I just was wondering if you can dig into gross margins in the back half. Maybe what are the main buckets where you have some opportunity for expansion and in the areas you expect pressure. And then, if you could just talk about what you're seeing on the promotional front. That would be helpful? Thank you.

Yes. Gaby, happy to do that. I will just tell you, we still feel pretty good about our ability to see improved gross margins in the back half of the year. Obviously, I'm not calling a specific number today. But the promotional environment has begun to moderate a bit in fall. We saw a bit of a benefit in Q2. We think that will continue - not going to fully recapture what we lost last year, which was obviously significant. But we're in a position with inventories cleaner, lower sell-in this year. We've talked about that and improved performance, to see some improvement on the promotional side. So it's moderating, it's still elevated versus historical. I think that's kind of the case across most of the marketplace, but certainly will be a bit of a benefit in the back half in our point of view. Business mix will continue to be a bit of a tailwind in the back half from a channel and geography standpoint. Product costs will be kind of neutral to some degree. We've got some puts and takes in there. And then you think about FX. FX is going to be a negative number in the back half of the year. That's probably the single biggest headwind that we see. But kind of wrapping it all up, I think we'd fully expect to see some improvement in gross margins if you look at just kind of the half two in isolation.

Got it. Thank you for that.

Thanks, Gaby.

Thank you. Our next question is from Jonathan Komp with Baird. Please proceed with your question.

Hi Jonathan.

Thank you. Thanks for giving us all the details?

Thank you.

Maybe. First question, if I could, Bracken, just I know Matt outlined roughly four quarters, it sounded like to achieve the full run rate of annual cost savings that you mentioned today. Just want to get your thoughts, the time line to get the commercial organization structure in place and then maybe to start to see some tangible benefits, from cross-sharing best ideas? Do you have any initial thoughts on how long it might take - start to realize some of those benefits?

Well, the organization will be, as we're calling it here, stood up we'll be standing up as an organization in Q4. And then I would expect we'll start to see benefits from it. And early next year, could be Q1 or Q2. But it will take a few quarters to really get it to the point where it's really humming. And then a little longer than that to really be full-blown absolutely top quite effective.

Great. That's very helpful. And just two other quick ones, if I could. On the thought being no sacred cows, I thought I would ask. Does it still make sense to operate the full portfolio after the PACS business process is completed? And then just separately, the enterprise level performance targets, is the Board considering any changes to the structure of how those targets and payouts are determined? Thank you.

I'll take the last one first, Jonathan. We're always reevaluating our performance targets and how they work and certainly Brent Hyder, who I'm really excited, our new Chief People Officer, is just a fantastic partner for us. He and I talked about that. So I'm sure we will make changes with working with the Board and the top committee Juliana Chugg who's been a real partner for us here already. I think we will absolutely be making some changes over time, but I don't have anything that's specific to call out. In terms of portfolio, I just - we're not really in a position to talk about it today. We're - this company has always done, I think, a pretty good job of going through and reevaluating the portfolio over time and making additions and subtractions. And I think that will continue.

Great. Thanks again.

Thank you.

Thank you. Our next question is from Bob Drbul with Guggenheim. Please proceed with your question.

Hi Bob.

Hi Bracken, I just had two questions. The first one is, so with the Martino appointment, and I think Kevin, the change with Kevin's role, do you anticipate any other sort of senior management changes? Do you feel like you've evaluated everything at this point, at least in the near term? And the second question I have is just, I think inventories are cleaner than they were. Are there any pockets of concern either by brand or by region that we should still be concerned with? Thanks.

I'll let Matt take the last one first and I'll take the first one last.

Okay. I got you. Yes. So, I think overall, inventories are in a pretty good place, and we're making progress on our own inventories as we look at where our partner inventories sit. We're pretty good. There are some pockets and some brand-specific challenges as we look across the world. Vans is a bit elevated here in the U.S. and to some degree in China, although that's gotten a lot better, I think, in China. The softer sell-through we've seen of late in Timberland here in the U.S. market, we're a little bit elevated at this point in the season, although it's pretty early. But at this point in the season, we're a little bit elevated with timberland inventory. And while Dickies sell-through remains weaker, the inventory positions have improved quite a bit. So at retail inventory is in a pretty good place there. So, if we see sell-through improve, we'll see pretty quick benefit on replenishment side. So by and large, pretty good, Bob, but still couple of pockets as you'd expect given kind of the challenges that we're having in parts of the business.

Yes and to answer your second question - your first question, Yes, I think you're always - look, I really like this team and we're always looking at like we do with Martino and with Kevin, are people in the right places to have the right effectiveness. So, we'll keep doing that for as long as I work here. So that will certainly keep going. But we've got so much talent here, not only on my direct team, but also level, the levels below that. We talked a lot about Martino, but boy, Martino's team is really strong. I mentioned Nicole and her team, our finance team is super strong. I think we've just got a really - we've got a lot of talent here to work with. And even though we talked about - a public search for the next Vans leader and we will do one. I don't want - that should not suggest anything about the talent that's internally here. It's really strong.

Got it. Thank you.

Thank you.

Thank you. Our final question is from Abbie Zvejnieks with Piper Sandler. Please proceed with your question.

Hi Abbie.

Hi. Thank you for taking my question.

Thank you.

Do you anticipate any impact to the North Face business from regulations on PFAS? And then as a follow-up, are you seeing any changes in wholesale partner behavior as the effective date on some of these regulations are approaching?

I'll start that, and then I'm going to let Matt finish it. First of all, yes, we do see some product changes in North Face based on PFAS. PFAS for example, is the code some of the zippers and things that. And so, we're going to make and are already making changes there, and I think we'll be in good shape by the time we get to the finish line on the North Face. Do you want to add anything to that?

I'd say we're - this is front and center for us, and we're out in front of it in terms of managing toward the end of clearing through PFAS inventory. We've got inventory on hand. We've got inventory in stores. Each of our brands is working aggressively to ensure that we're selling through that over the next 15 months or so, and then there's opportunity and in different parts of the world and even some of our distribution channels here in the U.S. to go beyond that. But we've got it all out of the line by spring '24. And in fact, in many cases, it's already out of the line here as of as of now. So, I think we're in a pretty good place given the runway that we have and the work that the teams have done very proactively to be able to manage our way through this over time.

But to take your point, yes, I don't really see this as a date at which we hit, we're moving towards some date that's going to happen. I see us sort of as an event that's coming towards us, because you do have various wholesalers in the U.S. who are - who are going to try to move quickly here. And so, we're very respectful of that. We applaud their moves and we're going to have to make sure that we're dynamic in the way we deal with this, too.

Yes. Specific to your point about wholesalers, it's an ongoing dialogue, and we're very close to our wholesale partners in a very strategic way on this topic and others, obviously. So, we're in lockstep with the actions that need to be taken kind of across the board by brand and by partner.

Okay. Well, thank you so much. I really appreciate. This was my first call. I was a little nervous. I think it went okay or looking for feedback. But let me be clear we are intensely, intensely committed to really continue to be a great company for our customers, making our financial performance a lot better in attracting and retaining more great people over time. And I promise you we'll come back with a more comprehensive strategy over time. I'm not - I won't commit to exact date yet, but it's coming. You'll hear about it all, and I really appreciate all your help and support. Thanks a lot, and see you next quarter.

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