VFC - NYSE

Ladies and gentlemen, thank you for standing by. My name is Abby and I will be your conference operator today. At this time, I would like to welcome everyone to the VF Corporation Second Quarter Fiscal Year 2025 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. [Operator Instructions]. Thank you. And I would now like to turn the conference over to Allegra Perry, Vice President of Investor Relations. You may begin.

Hello and welcome to VF Corporation's second quarter fiscal 2025 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 and continuing operations 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, Paul Vogel. Following our prepared remarks, we'll open the call for questions. I'll now hand over to Bracken.

Thank you, Allegra, and thanks all of you for joining us. This is a fun week for us. Today, we'll update you on Q2 and get all the discussions of it and Q3 behind us. Then day after tomorrow, we'll give you a deeper look at what our game plans are ahead. I'm putting in a plug now for the event, which will be broadcast live and you'll get to meet a few more people from our team. Q2 was another quarter of really good progress. We delivered on our expectations, consistent with the guardrails we provided last quarter. And VF transformation continues and within that, we're making strong strides in advancing our priorities. While Q2 revenue was still down as we expected, we had our third straight quarter of sequential improvement in the decline rate with moderating declines at Vans in the Americas and really almost everywhere else too. We expanded gross margins and we did a little better on SG&A relative to our own expectations. Paul, will talk you through the financial results later in the call. Moving on to Reinvent. As we pass the one year of anniversary when we introduced you to the program, my confidence and excitement about the transformation taking place at VF only continues to grow. I'll save a lot of the detail and future plans for later this week at the investor event, but today, I'll give you a high level update on the further progress we made in Q2, on our four stated priorities. The first priority was to lower our cost base. We generated another $65 million in cost savings during Q2. And as guided, we've now fully executed all actions to deliver $300 million of cost savings by the end of this fiscal year. We fully intend to go beyond this initial savings target as we'll discuss Wednesday. We're also continuing to reinvest some of that back into the business, as you know, focused on the key areas of product and brand building. The second priority was to strengthen our balance sheet. We made a significant step forward this quarter. Our work to normalize inventories continues and we delivered a further reduction in the quarter despite building for our upcoming peak season. Inventories were down 13% at the end of-the quarter versus last year. Net debt was further reduced by almost by almost $450 million compared to this time last year. And of course, you will see that just after the end of the quarter, we concluded the Supreme divestiture. The net proceeds of almost $1.5 billion were in the bank. And just as fast, we went right back out to pay the $1 billion term loan after the quarter closed. And we're on track to pay the next term loan of $750 million by the end of the year. Third one was that we would fix the U.S. business. Our Americas business improved sequentially with revenue down 9% in Q2 compared to down 13% in Q1. The new fully operational regional platform is starting to deliver tangible results, driven by a quarter, or greater emphasis on brand elevation and full price sales. Importantly, we continue to improve our forecasting accuracy and have now delivered 10 consecutive months on our internal plan. And the last one, delivering the Vans turnaround. The Vans overall performance in Q2 was down 11%, a significant improvement relative to last quarter when we were down 21%. This down 11% was as expected. There are further signs that we're making progress, which we'll continue to build under Sun's leadership. From a product standpoint, Knu Skool continues its strong momentum and further strengthened its position as the number two franchise globally. We're seeing some encouraging results from other new product franchises launched over the summer, particularly Upland and Hylane. Our brand elevation is starting to resonate too. Through the OTW premium label and Influencer program, Vans is targeting influencers and early adopters using cities and moments and product collaborations. During New York City Fashion Week a few weeks ago, the brand engaged with fashion influencers and made a significant cultural impact by spotlighting the Satoshi and Paralyzed OTW Classics, which we sold through at 100% levels. I'll be wearing the paralyzed OTW Classics against Brent Hyder, our CHRO's better recommendation because I think you'll love them. The [indiscernible] collaboration was sold out in five minutes upon launch in September. And our consumer research, interest was trended positive in Q2 in key markets. Now let me give you a short update on the North Face. As we previewed last quarter, revenue was down sequentially in Q2 because of the strong -- super strong comparison to the prior year when we were up 17%, but we were right in line with the guardrails we gave last quarter. During the quarter, we saw particularly strong performance from backpack steering back to school. The brand also continued to have strong growth in APAC, driven by Summit Series. We had some big wins in EMEA too, where we delivered our strongest month ever in September and where our athlete, Katie Schide broke a course record and won the famous Ultra Trail du Mont Blanc race in August, wearing head to toe the North Face. The brand launched its first global brand campaign in over three years, generating a strong response on digital media, particularly with women. And we're investing in our stores. Our recently opened North Face store on 6th Street in Williamsburg, Brooklyn, includes our first ever shop-and shop for the North Face renewed, a program we've had in place to refurbish, recycle and resell the North Face product. We're also excited and recently announced our commitment to a new Fifth Avenue location, which will open in the fall of 2025. Finally, we're proud that Time Magazine recently ranked the North Face the world's best brand in the outdoor apparel category. Turning to Timberland. Revenue for the brand continue, improved sequentially to negative 3% in Q2 compared to negative 9% in Q1. The yellow boot continues to perform well globally with ongoing momentum enhanced by the new iconic campaign launched in September, which is driving traffic to our stores and online and also contributing to the growth of the boot. Looking ahead, we feel good about where we're heading in Q3. We expect to drive further sequential improvement that builds on the progress we've made in the last few quarters. Now I'll hand it over to Paul, who will take you through the financials in more detail, and I'll come back at the end to wrap it up. Paul?

Thanks, Bracken. Good afternoon, everyone. It's been a great first four months and I'm looking forward to unveiling more information about our long-term financial potential at our Investor Day on Wednesday. Moving on to Q2, as Bracken mentioned, we continue to advance transformation and continue to move forward as we made progress in reducing costs, strengthening the balance sheet, fixing the Americas and turning around Vans. Recapping the quarter, Q2 was largely in line with expectations with sequential improvement in revenue and a positive inflection in gross margin. Total Q2 revenue was down 6% year-over-year, which marks an improvement from down 10% in Q1. By brand, Vans was down 11% versus last year, improving from Q1 of down 21%. We are seeing the benefits from the inventory cleanup actions taken over the past few quarters, particularly on profitability as we rightsize the brand's cost structure. The North Face revenue was down 4%, in line with the guardrails we gave you last quarter, given the strong prior year Q2 comp of up 17% from shipping timing normalization. Greater China continued its strong momentum, but this was offset by ongoing Americas pressure. Timberland was down 3% in the quarter versus Q1 down 9% as we saw strong growth in premium boots and rounding out our top four brands, Dickies was down 11% in Q2, an improvement from Q1's decline of 14% and the third sequential quarter of improvement. By region, the Americas was down 9% in Q2 compared to down 13% in Q1. In EMEA, we were down 5% in the quarter, but September marked the biggest month ever for the region. The wholesale trends weighed on performance. The APAC region was up 5% in Q2, led by strength in the North Face and China. By China, we saw sequential improvement in both global DTC and wholesale as DTC improved to down 8% after contracting 13% in Q1 and wholesale is down 5% after being down 7% in Q1. Gross margin was up 120 basis points versus last year to 52.2%, inflecting the positive and in line with our expectations and primarily due to product cost tailwinds. SG&A dollars were down 14% versus last year or down 1%. This was better than our expectations of up $25 million to $35 million as we realized higher reinvent savings in the quarter. In addition, there was a shift of some spending from Q2 into Q3, roughly $10 million to $15 million. We did see SG&A deleverage overall of 180 basis points year-over-year to 40.8% of sales. During the quarter, we realized approximately $65 million of total reinvent savings, bringing us to a cumulative total of approximately $200 million since we initiated the program. We are on track to deliver $300 million of savings. These savings offset additional investment in marketing and product ahead of the holiday season, more normalized incentive compensation and inflation. This resulted in operating margin of 11.4%, down 60 basis points versus last year and operating income of $315 million. Diluted earnings per share of $0.60 was down $0.03 versus fiscal '24, aided by a lower tax rate for the quarter. This reflects favorable discrete items within the quarter. Turning to the balance sheet. We continue to make good progress on inventories as we ended Q2 down 13%. And as Bracken mentioned -- we mentioned, we completed the sale of Supreme at the beginning of the month and made an important step towards our key financial priority of deleveraging our balance sheet by paying down the $1 billion term loan. Before I move into details of our expectations for Q3, I want to share some thoughts on how we will be issuing guidance. Moving forward, we will provide revenue and profit guidance one quarter out, starting with Q3. Overall, we expect Q3 to show further sequential improvement across the business. For revenue, we expect Q3 to be in the range of $2.7 billion to $2.75 billion, translating to a decline of down 1% to down 3% on a reported basis. We are modeling FX to have approximately a negative 100 basis point impact on our reported growth rates. This trend reflects a continued stabilization of revenue trends driven by wholesale improvements compared to last year when, as a reminder, we took inventory actions, which impacted both Q3 and Q4 of fiscal '24. Moving down the P&L. We expect Q3 operating income to be in the range of $170 million to $200 million with gross margin up year-over-year benefiting from lower product costs and fewer reserves and SG&A is expected to be up modestly year-over-year, mainly a result of the reintroduction of incentive compensation as we have discussed in prior quarters. Additionally, we expect more variability in the tax rate by quarter. For Q3, we're expecting the tax rate to be in the low-20s versus Q2 in the mid-teens. And while we're not providing Q4 guidance at this time, I want to give a little bit of color on expectations for the quarter. For starters, we expect Q4 to show another quarter of sequential improvement in year-on-year revenue trends. We expect gross margin to be up and SG&A to grow at a similar rate to Q3. For the full-year, we expect free cash flow of around $425 million with core fundamentals in line with prior guidance. When looking at the $600 million guidance we gave earlier in the year, our updated forecast reflects the $140 million impact from the sale of Supreme and a slightly higher benefit from the sale of non-core physical assets. Additionally, given the success so far of our Reinvent initiatives, we have decided to fund an additional $50 million into cost savings, which should drive additional savings in fiscal '26. So in summary, we continue to make progress on our key financial priorities. I'm looking forward to speaking to you all again in a couple of days and providing further insights to our financial strategy. I'll now turn it back over to the operator for Q&A.

Thank you. And we'll now begin the question-and-answer session. [Operator Instructions] And your first question comes from the line of Adrienne Yih with Barclays. Your line is open.

Yes, good afternoon. It's great to see the progress. Bracken, you talked about sort of increasingly being able to kind of predict the business. I'm really curious what are the drivers of the business that are becoming more predictable? And I really wanted to hear about specifically those that drive the top line and then obviously, particularly Vans followed by TNF. And then, Paul, what are the incremental investments that you will -- that you're contemplating? Is it brand building, demand creation, on outside of the incentive comp. Thank you very much.

Thank you, Adrian. Thanks a lot for the comment. Yes, so this is 10 consecutive quarters in a row in the Americas, which was our most difficult thing to predict before. And we're really focused on -- I'll focus really on the P&L, it's really not only revenue, but also our gross margins and our SG&A. We're -- we're really able to predict across the board underneath that to be able to predict that. You've got to have -- and I'll stay with revenue for a second, you got a pretty good sense for every part of the world what they're going to do. And so it's obviously been true in the Americas, but it's also been true in EMEA and APAC. So I just feel really good about our ability to roll up a forecast and have it be pretty accurate.

Yeah. And on the investment side, it's really two things. It's really on product and marketing. We'll continue to make sure that we can invest in those areas as we reinvest the savings from Reinvent.

Great. Thank you very much.

Thanks, Adrienne.

And your next question comes from Laurent Vasilescu with BNP Paribas. Your line is open.

Hello, good afternoon. Thank you very much for taking my question and congrats, Bracken and Paul, for the progress you're making. Bracken, I was curious to know how is the health of your overall wholesale business and what do you -- what do you see your inventory levels look like going into the holidays? And then maybe, Paul, just on the free -- on the cash flow guide, can you kind of just maybe if you could give us some guardrails around the free cash flow for the second half, I think it's about $700 million. How do we think about it between 3Q and 4Q?

Thank you, Laurent. And on the overall wholesale business, I feel good about it. I think we're really on the right trajectory. We're really on the comeback trail here across the board. And in the Americas, the creation of this Americas region has really had a strong impact, especially with our key accounts there where we're starting to see good strong momentum. In terms of channel inventories, I feel good about our channel inventories around the world. I mean, there are a few puts and takes, I would say. We're a little short in some places where the winter came late last year. So people are probably a little slow to take some of the inventory in for the North Basin things in those parts of the world, but overall, I feel really good about the channel inventory there. And then I'd say we're probably a little high in places like China where it's been honestly, in a turnaround, you've got -- you've usually got a few places that are slow to turn. I think Vans is one of the slowest to turn there in China, where it's kind of two steps about forward and two steps back. But overall, I feel really good about the Vans turnaround. I feel really good about the channel inventory.

Yes. And on the free cash flow side, we're not going to guide quarters out. There's always so much variability in terms of free cash flow what happens in each quarter. But I will say just kind of reiterate -- reiterate what I said on my prepared remarks, which is I think we feel really good about where free cash flow is coming in on the year relative to what we had given us as guidance starting to year -- the year. And particularly, we're right in line with expectations, even maybe slightly little bit better. And the change in this quarter, in particular in terms of the full-year is really about taking that and using that $50 million to reinvest in the business for the benefit of '26. So again, in line on the overall core fundamentals on free cash flow and feel really, really good about the trajectory and where it's headed.

Great to hear. Look forward to Wednesday.

Thanks, Laurent.

Thank you.

Look forward to seeing you.

And your next question comes from Simeon Siegel with BMO Capital Markets. Your line is open.

Thanks. Hey, good afternoon, everyone. So I was curious just how to think about your fixed risk variable costs at this point. As you just as you march closer to the revenue and profit improvement, just think about the puts and takes, really great gross margin, you're working your way through cost savings, the adjusted operating margin is narrowing its gap, still down. So just trying to think about how to think about ongoing deleverage impacts, maybe the reinvestment priorities and any other expense pressure points as we walk towards that sales return? Thanks, guys.

Simeon, such a good question. We're going to answer it on Wednesday. It is a great question. Thanks for it. We'll try -- we'll give you a good glimpse at that on Wednesday.

Fair enough. All right. I look forward to it. Thanks, guys.

Okay. Thank you. But by the way, thank you for the comments on the improvement and we feel the same way. We really do feel like we've got good momentum across the P&L.

Bracken, since we did that, can I throw in and maybe if this is for this well, just curious AUR versus units, maybe the past quarter and which made you more comfortable and then how you're thinking about as you elevate brand? Excuse me, how you're just thinking about that discrepancies?

Yeah. We usually don't give that level of tail, so I won't now, but -- and we don't plan to do it Wednesday either. But I would say overall, I feel good about the brand elevation program we've got internally. I think we're really on the right track. It's going to take time to play out. And I mentioned some of the things about OTW and Vans, which is the top end of that, the real tip of the spear. But I think we're on the right path. It's going to take a few years to really get into a full scale elevation game, but that's where we're headed.

Yeah. I would just add one minor thing, which is we are definitely seeing more full price selling in the last quarter, which is encouraging.

Perfect. Thanks, guys. Appreciate it.

Thank you, Simeon. See you Wednesday.

And your next question comes from Michael Binetti with Evercore. Your line is open.

Hey, guys. Congrats on a lot of progress. Glad to see it. So I guess since Vans and Vans America specifically is a big focus, could you help us understand just sort of best that you're willing to share the channels in America? I know in the past, you've said B2C would be where we would see the turn for Vans, first. I think a lot of the POS data that people look at through the quarter was certainly worse than down 9 that you reported. So I'm just curious if we're getting close to positive on the wholesale side. Is that actually leading B2C at this point or maybe just how to think about that? And then I guess stepping back a little more broadly, any examples of how -- and maybe you're willing to share on the evolving conversations with some of your wholesale partners now that you're starting to see some green shoots with the new product?

Yeah. First of all, we did not say that we thought B2C would turn first to Vans. We actually said they were reverse. I thought it would probably be -- it's a little counterintuitive. I said it would probably turn in wholesale first. Wholesale is outperforming B2C right now, which isn't -- isn't too big a shock when you consider the traffic issue. They -- wholesalers continue to have plenty of traffic. We're dependent on generating our own. So it's going to take a little longer to get there as the products improve and the pipelines improve, you've got a really clean -- a clean set of products in the wholesale channel that people are coming in and discovering. And to answer the second part of your question, I think wholesalers overall have given us really positive feedback on the path we're on with Vans and I think we'll continue to see improvement. So I feel good about it.

If I could throw in one more, any early examples of how the regional platform is starting to benefit on the day-to-day go-to-market process at the Vans?

Yeah, I just -- I'll repeat the one I gave earlier, but there are others. The -- our key accounts really in that regional platform, one of the things that we've done historically very well in EMEA, under Martino and in APAC and under -- under Martino is we've consistently done a good job of really, really deeply understanding the biggest accounts and making sure we're bringing all we can to help them grow and help ourselves grow. And we're starting to see that in our top accounts in the Americas. And I think you'll see more and more. They'll benefit every account we have, every wholesale account, but in the beginning, it's going to especially benefit the big ones. And it is.

Okay. Thanks a lot.

Thank you.

And your next question comes from Brooke Roach with Goldman Sachs. Your line is open.

Good afternoon and thank you for taking our question. I was hoping we could dive a bit deeper into your expectations for the puts and takes on gross margin as we go forward, especially given your cleaner wholesale path, the better full price selling comment that you just gave, but also some of the benefits from product costs. Can you help us understand the magnitude and relative strength of each one of those benefits that we should expect over the course of the next couple of quarters? And what your outlook is for recapturing that gross profit margin? Thank you.

Yeah. I mean we're not getting too much detail on that, I would say we as I mentioned, we expect gross margin to be up in Q3 and up again in Q4. Keep in mind, we are -- we do have some benefit from the actions that were taken last year in Q3 and Q4. So that will also help in terms of kind of where we're headed. But in general, it's a lot of things we've laid out and we'll get into a little bit more detail on Wednesday, as well on some of this. So not to keep with that same answer, but there's a little more detail we'll share on Wednesday.

Wednesday, we'll say Friday, so. Thank you, Brooke. Sorry, about that.

And your next question comes from Lorraine Hutchinson with Bank of America. Your line is open.

Thanks. Good afternoon. I was hoping to get a little more detail on your view on the North Face, North America. Any comments by channel or any reactions you've had from your wholesale partners about how the winter season is progressing?

Yeah. It's a little too early to say. I'm less from our wholesalers, or the trade partners and more from ourselves. I'd say it can't be any worse than last year. It seems like winter really came last late last year and it seems like it's already kind of here in some parts of the U.S. now. We're sitting here in New York today as you are and it feels a little chillier here than it did before. I just came from Canada where it's definitely getting chilly, but it always does. So I don't know, I'm optimistic. Look, I think we're going to have our guidance kind of independent of how severe the weather is, or isn't. We've got so many things internally we can fix and to including our go-to-market structure that I'm confident in what we're guiding here, whether without a good winter, or a terrible winter, depending on how you decide to interpret those two words. But yes, so let's just see how it goes. But I think our -- we've got enough in our control right now that we're going to deliver what we're telling you.

Thank you.

Thanks, Lorraine.

And your next question comes from Matthew Boss with J.P. Morgan. Your line is open.

Great. Thanks. So Bracken maybe just to dig in a bit more on Vans. So maybe just where you stand on some of the reset actions that you had outlined? And then as we think about maybe top priorities over the balance of this year and into next year, how best to measure sequential revenue growth improvements and just the timeline as we think about maybe some of the earlier wins relative to Sun's potential influence on product assortment and multi-year growth?

Yeah. Thank you. Thanks, Matthew. I think overall in terms of the reset actions, we described the reset actions we took in the end of last year, we're coming up to lapping those as Paul mentioned. So they're in the rear view mirror. I mean, that's probably as good a summary as I could give you. In terms of top priorities going forward for Vans, I think if you really laid them out, we've already started a program of introducing new products that obviously came before Sun got here, but she's already touching everything and she'll continue to touch everything, every new product, every marketing campaign, she's in the middle of the action and those of you who know her know she would be. So she definitely is. In terms of the timeline for and a level of improvement, you could expect quarter-over-quarter. We're not really going to provide that, but I'm really excited about it. And I think we're on the right path and you can kind of see it and I mentioned it in the opening, you see some excitement coming in search interest in some of the biggest markets around the world now, that's really a change. And so look, it's early days, but I feel really good about Vans. I'm excited about the brand. I'm excited about Sun and the reset stuff is in the rear view mirror.

Great. Best of luck.

Thank you, Matthew.

And your next question comes from Jay Sole with UBS. Your line is open.

Great. Thank you so much. Bracken, I just want to make sure I understand the message of introducing guidance here because I think when the guidance was removed the message is we're not going to give guidance until we know we can give you guidance that we know we can deliver. I think the expectation at the time would be full-year guidance. This is quarterly guidance. So is -- are you saying that like the we're sort of at the bottom here, we're inflection like big picture like from here, it's and upward kind of like it happened at Logitech, or is it more like, look, we're giving you a little bit of taste because we have our visibility into quarters, but there's still more work to do. I'm just sort of curious like why this quarterly guide, not the full-year guidance sort of explain how you're thinking through when to introduce the full-year guide?

Yeah. Let me do. I'm going to -- I'm so glad you asked that question. Yeah, when we remove guidance, you described exactly what I said. I said, it's hard to guide when you don't have real confidence in the numbers that you're looking at internally. I do now. So what -- and so you're asking the question, why are we guiding just one quarter out instead of a year out. This is something Paul and I talked about after he got here and Paul had an immediate impact on me. He connected to my common sense, which is, I don't really think it makes sense. And Paul kind of referenced it when you described it, for us to try to guide a year when there's nothing magical about a year. A year is just four quarters out. We could guide five quarters out, seven quarters out, nine quarters out, no quarters out. So I think at the end of the day, the most important thing for us is to make sure we're delivering quarter-in and quarter-out. And that's exactly what we're going to do. So yes, so that's our game plan. And we'll talk a little more about this on Wednesday.

Got it. Okay. Bracken, thank you so much. Looking forward to Wednesday.

Thank you. Thanks for the question.

And your next question comes from Paul Lejuez with Citi. Your line is open.

Thanks. It's Tracy Kogan filling in for Paul. I know you guys have mentioned that you expected additional savings beyond the $300 million. And I was wondering if maybe you could frame the magnitude of the savings you see and where these efficiencies might be? And then will you be in reinvesting a similar proportion like you did with the first round? Thanks.

Tracy, I hate to say this, but we're going to have to wait on that -- the answer to that question until Wednesday. What I would say is, I'm really excited about -- I'm really excited about the first round of savings we did. I think we did a good job of really level setting and removing some of the most -- some of the gross inefficiencies and taking some of the lowest hanging fruit. Anything we do from here is going to be really about a little deeper and more focused on reengineering to deliver more growth. So we will talk about that Wednesday.

Got it. Can I just sneak one in about the North Face in North America. I was wondering if you saw anything kind of by month as the quarter progressed that might indicate why you saw the pressure, whether it was weather or something else?

No, I wouldn't really say that. I'd say, I guess, look, this is my second year here, so it's hard to and it's -- and it's Paul's first. So I don't think we looked at anything by month and said, we see a signal one way or the other. I think things were -- things are probably about like we expected them to and we'll see. Now we're in the -- now we're sitting in New York and luckily, it feels a little cold to me. So I had to go out and buy jackie yesterday from the North Face, so.

Yeah, I would just add, we said on last quarter that given the tough comp on North Face from last year that we expected to be just slightly down sequentially from where it was in Q2 and that's exactly where we came in. So not getting into specifics of regions, but just holistically, the North Face came in right in line with expected and basically what we had previewed in the guardrails after last quarter.

Got it. Thanks very much, guys.

Thank you. Thanks, Tracy.

And your next question comes from Ike Boruchow with Wells Fargo. Your line is open.

Hey, guys, let me add my congrats. Two questions, which I don't know if you'll answer, but I'm going to try. On the non-core asset sales, I know it was never a specific number, but I feel like $50 million to $100 million was kind of the thought before. Is there just to kind of round out that the $425, any way you can kind of just give us the number to help us get there? And then I guess, Bracken, the second one is for you, just on the portfolio review that you've talked about at length since you started, are we officially done with that review? Should we no longer be asking about asset divestitures or anything? And are we just running the business or is there still potential for something to happen in the foreseeable future? Thanks.

Yeah, I'll answer the last one real quickly and I'll let Paul answer the first one. We're officially done for now. How is that? Because I think you're never really done. So we'll always be reexamining the portfolio and deciding if things fit or not based on their not only their strategic fit, but their performance and expected performance. So I'd say, yeah, we're done for now, but we'll keep looking at it. Paul?

Yeah. And I think what we had said was we expected about $60 million or so on the asset sales and we did better than that by about $50 million.

Got it. Thanks.

Thank you.

And your next question comes from Jonathan Komp with Baird. Your line is open.

Yeah, hi, thanks. Good afternoon. Bracken, I just want to ask, as you think about third quarter and fourth quarter, any more detail on sort of the continued sequential improvement or lessening of the declines? And then as you look at the business broadly, are there parts that are running ahead of what you hoped or does anything come to mind when you think about areas that might be outperforming what you had expected? Thanks.

Thank you. Thanks for the question, Jonathan. I don't really have anything meaningful to say to you except that I think there's always things are a little bit better, a little bit worse. But overall, things have kind of gone along surprisingly consistent with what we expected. And so I think it's very, very consistent. And while we're not going to dimensionalize kind of what the rate of improvement as we go forward, I'm excited about the path we're on and I think it's going to continue.

Great. Looking forward to Wednesday. Thanks.

Thanks. Me too. Thanks, Jonathan.

And your next question comes from Jim Duffy with Stifel. Your line is open.

Thanks. Good afternoon. Perhaps an area that deserves more attention. Timberland, it sounds like some enthusiasm around the premium boots. I'm curious, is that global commentary? And does that go beyond your collaborations? Are you seeing good elevated interest in the yellow boot franchise?

Yeah, thanks for the question. I just bought yet another pair of yellow boots. Maybe that was showing up in the numbers. I keep buying more and more probably will show up again in Q3. But yeah, the yellow boots' doing well. I mean we had -- we had this Louis Vuitton collaboration, which was great about a quarter and a half ago now and we continue to see good solid strength and it is around the world. So far, so good, but we'll stay-tuned. It's still down, right? So less down is better than more down, but it's still not up. So let's keep watching this and see where it goes from here.

Okay. And then another brand where there wasn't a lot of discussion, Dickies. Just your thoughts there on where you are with respect to stabilization of that business? Thanks.

I just love Dickies. I have to say, I love all our brands, but I really love Dickies because it's just a special brand. It's -- like they are. It's such a cool deep history and it's so old as a brand, you've got 16-year-old kids wearing them to go surfing right off the beach anyway. And I just -- so it's such a cool brand. I'd say where are we in the stabilization. I think we're right in the middle of it. We've really reset our strategy and we've got the right level of focus on making sure we're winning at work and then eventually going beyond that. I do -- I am really excited that we've -- I temporarily took over down there like I did at Vans before Sun came and I've now relinquished my job because Chris Gobel has come over from the Gap and Chris is a -- was a star over there. He'll be a star over here. He's -- he's done -- he did a terrific job as a General Manager of the Gap in North Americas and he was part of the big turnaround over there and I think he'll be -- he'll leave the turnaround here on Dickies. So I'm excited about him. But we'll see. It's really early. We're definitely at just the stabilization period within Dickies getting it back to growth is a different story and that's really going to be led by Chris.

Very good. Look forward to hearing more Wednesday. Thanks.

Thank you. You won't hear too much about Dickies on Wednesday because we're going to -- remember, we're going to do all the brand stuff later in the year. So this is going to be very much focused on --

Understood. I had a lot of questions I figured you wouldn't answer till Wednesday anyway, so.

Okay. Okay. Well, you can feel free to wear it. If you wear Dickies, it may answer more questions.

All right. Good.

Okay.

And your next question comes from Bob Drbul with Guggenheim. Your line is open.

Hi, Bracken. Hey, Paul. I just got two questions. The first one is, can you expand some more just on what you're seeing by brand in China, sort of last quarter, sort of current trends in China? And then the second question is just on inventory sort of down 13% against the minus 1% to minus 3% looking forward. Is that how we should expect -- like when you look at where your inventory levels are sort of across the company, is that how you plan to run inventories going forward? Or is there more add max that you need as you sort of resume towards revenue growth? Thanks.

Well, let me come back to -- let me answer that last one first and then we'll take the China question. Yeah, overall, I would say, yeah, in the last call, I think I said we're like at -- we're like at 100 -- what was 155 days of inventory or something. And we -- and I said, I think we still have room down from there, but that's actually not -- that's not a bad number. It's a pretty good number. But I think we can bring it down further from there over time, but we'll have to -- we'll have to change the way we operate to get there. So there's internal work that's going to be required to get us down further than that. But over time, I bet that we'll end up lower than that. On -- and so I don't think there's some reason why we'd have our inventory suddenly go back up. I don't think that's going to happen. If anything, it will come down. On China, overall, I think you're reading the same things we are in China. It's -- we're not -- we're so much in our control that I'm not too worried about macro environments, but it is true that the macro in China is a little softer than it has been. The North Face is really the highlight. It continues to be strong and the -- that long-term secular trend seems to be in here for the long-term and secular. So that's exciting and we're excited about it and it's by far the biggest business in China now. So it's probably not worth talking too much about the rest of the businesses there. They're in various -- Vans is in a -- is really in the turnaround mode there and the rest of the brands are falling to different places. But I'd probably focus on North Face for now until we really bring you more info.

Thank you.

Thank you.

And your next question comes from Dana Telsey with Telsey Advisory Group. Your line is open.

Hi, good afternoon, Bracken and Paul. As you think about the free cash flow guidance that was provided, any expansion in terms of what's changed within the guidance either by brand, channel or geography? And then with the improvement that you've seen in the brand's performance, how much of it do you think was specific product that helped drive that? How much of it was the easy comparisons or what you're seeing in any of the industry segments? Thank you.

I'll try and-answer the last one first and I'll let Paul not answer, the first one, which is because it's kind of a hard one to answer. I -- I think in terms of that, the various brands and where they are, I think it's a combination of things. I do think we've got a better and better and it will get progressively better set of products coming out over time. In some cases, the compares are easier. They're going to -- particularly be easy as we get in three and four in a couple of places like Vans. But overall, I'd say it's -- it's an integrated thing. We've got channel changes where we've reduced the amount of value channel. For example, in Vans, we've got this that took us in the wrong direction. There are quarter about two quarters ago, three quarters ago. And I would say in each element of the -- of the business, if you went through the five piece of marketing, each element has changes and those changes will progressively work their way through the total business over the next year or two. I apologize to you who are particularly short term trying to figure out how to gauge each one of those and their impact on a quarter. What I can tell you is when they're synchronized, they have a bigger impact. And we're getting more and more synchronized across each of these brands with a real either growth plan, transformation plan or something. So we'll talk a little bit more about that on Wednesday, but I feel good about the overall path we're on, although I don't think I could really parse out exactly what contribution each one of those is making to the current numbers.

Yeah. I think Bracken, we would never get to that level of detail on free cash flow, but --

Okay.

Thank you.

Thank you so much. Thank you, Dana.

And your next question comes from Janine Stichter with BTIG. Your line is open.

Hey, you've got Ethan Saghi on for Janine. Thanks for taking my question. I was just wondering what are you seeing in terms of the promotional environment at both Vans and the North Face as well in the overall industry just heading into the holiday season? Thanks.

Well, I mean, I don't have too much to say except it looks better than last year, which is great. And we're sitting on a lot of inventory last year and we're sitting on less this year. So that's good. And our retail partner -- wholesale partners are too. Other than that, I wouldn't have much to say about it. I mean we're -- as Paul alluded to, we're doing more full price selling, which we like. Doesn't mean we're without promotion, we're not but it is better.

Got it. Thank you.

Thank you.

And your final question comes from John Kernan with TD Cowen. Your line is open.

All right. Thanks for squeezing me in.

John, this is so important.

Bracken, how you characterize --

I know, It's going to be a good one, right?

For sure. Yeah.

How would you characterize Vans internationally versus domestic, obviously? Business for VF is now larger and it's comfortably larger than the domestic business as a consolidated company. I'm just curious when you look at Vans, how Vans is trending in certain geographies versus the United States?

Well, I probably won't go that deep, but which is not that deep by the way. But what I would say Vans is I think Vans is underdeveloped internationally. I think -- I felt that before I got here. I feel that now than I am here. But that's an easy thing to say and a much harder thing to unlock. So this is part of the opportunity I think we really have as a company. How do we -- how do we get really strong growth around the world? But I would not underestimate how much opportunity we have within the U.S. I mean that might be our single biggest upside right now. If we can really get ourselves in a position where we're back to where we ought to be in the Americas, we have a lot of growth opportunity there. So we've got opportunity in both side, on both the international businesses, parts of our business and particularly U.S. business. So I'm really excited about. It's one of the things that excites me about the company. John, it was a great question.

Looking forward to more color on that.

Okay, good.

On Wednesday.

Well, I will bring this to a close because it does sound like we're kind of at the end of our program. I want to thank all of you for attending this call, but I especially want to thank you in advance for listening to the next one or attending the next one. This will be the first Investor Day that Paul and I have had together and actually all of our leadership teams had together and we're excited to share with you kind of what our game plan is. And I think our transformation is on track. We've made a lot of progress against the stated priorities we've had and we'll have some new info for you on Wednesday too. So don't miss it.