V.F. Corporation (VFC) Earnings Call Transcript & Summary

Good morning, everybody. Thanks for joining us for day 2 of the Wells Conference. It's my pleasure -- Ike Boruchow, softlines analyst at Wells. It's my pleasure to have VFC with us on stage. We have CEO, Bracken Darrell; Paul Vogel, CFO. Thank you, guys, for being here.

So I think Bracken, I'll start off with what's most topical. I mean there was a press release that hit this week, Dickies. I mean, I guess the simple question is kind of why now? I did kind of think the portfolio review was complete and you had kind of committed to certain brands within VFC. So I guess why selling the brand? Kind of what came about?

We -- first of all, in terms of portfolio review, we do it every year. So it's kind of a continuous thing. We're always doing that. But yes, we didn't have any plans to sell Dickies. I love the brand. I'm wearing it today. I wear it all the time. But honestly, we just -- we got an inbound from Bluestar, and it was just really attractive. And from our standpoint, we look at our portfolio, and we've got a lot of different brands to play with. And Dickies was always on the edge of what are strategically the brands that fit, but it did fit. But we just felt like, okay, if we've got -- our priorities are, and I'll name them roughly in order, okay, Vans, North Face, Timberland, Altra, Dickies. And when you look at where you're really going to distort your attention and your investment, the Dickies was fifth in there. So I think it probably wasn't going to get the level of investment that it could have gotten over time. So all those things put together, it just made sense. And it lowers our -- it will improve our leverage ratio. It will enable us to pay down debt. So it's just a good story.

And I guess maybe to Paul or Bracken, back to you. Just -- I mean, any chance could you provide reassurances, there was no performance reasons behind the transaction, you're on track to achieve the fiscal year free cash guidance to meet your commitment to pay down debt. Just any commentary you can add there?

Yes, I mean -- why don't you go ahead...

Yes. I mean -- there's no change anything. I would say at a very high level, I mean, hopefully, you guys are starting to get to know us at this point. We would never do anything for a quarter or 2. It's just not how we think. It's not how we operate. Anything we do is going to be the right strategic long-term decision for the company. So there's nothing to do with anything going on this quarter, next quarter or currently at all. It's really, as Bracken said, if somebody gives you an inbound call, you have to listen. In this case, we thought it was something that made a lot of sense for us in terms of the eventual price we settle on as well as the focus on other areas of the business.

Yes. If I could add to that, I mean, we certainly weren't planning this. I mean if you look at -- we wouldn't have moved the headquarters to California. We wouldn't have changed our reporting. We certainly had -- even at that point, we hadn't had any discussions about this. It really came in and went so fast. We're looking forward to restating the model again. It's...

You guys keep us on our toes there. I guess given the sale proceeds can fully fund the next tranche of debt, I guess, what will you guys do with the funds that were previously planned to pay down the maturity with?

Yes, I just won't have to draw down on the ABL. So if you kind of take a step back and say, why do we do the ABL, it was really done just for security reasons, right? So it was -- my view in my role is I need to sort of always plan -- expect -- hope for the best and then plan for the worst. And so in my case was if things went sideways, if the economy, if tariff, if happened, I wanted to make sure I had access to capital. I felt an ABL was -- it is more secure than the former credit facility that we had. And so that's why we went down that path, knowing we would never need to draw down on the $1.5 billion that we actually had, but it gave us the flexibility if we ever needed it. So in this case, we'll have all the proceeds from Dickies, which means we won't have to draw down really at all on the ABL. So it just saves us that incremental debt. It saves us that interest expense, those types of things.

Got it. So moving away from Dickies, maybe back to Bracken. Just more broadly, VFC as a whole, like the macro changes every day, how are we feeling about the U.S. consumer, the global consumer relative to the medium-term targets you guys have spoken about? How should we be -- how are you kind of perceiving that to be playing out?

Well, we -- in our medium-term targets, we said from the beginning, we're not going to be too dependent on whether it's a great economy, a good economy or an average economy or slightly below because we have so many things within our wheelhouse really we can work on. But I would say so far, the -- especially the American consumer has been stubbornly positive. I mean I think it's hard not to say that if you just look at what's going on.

And is the concept of tariffs, anything else to kind of share with us today, mitigation impacts, anything new that's worth kind of discussing?

No, we've been -- we said from the beginning, and we feel really strongly about it, we're going to offset all the tariff between cost reductions, very strategic pricing and a little bit on the plant relocations. But overall, we feel very good about that. And we're going to have probably a little bit in short term that we've got to manage. But by the time you get somewhere into next year, we'll have offset it all.

And remind us the mitigation strategies and what percent of that or however you can kind of comment on like how much is just kind of like-for-like pricing to offset versus other...

We've dodged that question effectively so far, and we'll keep it up here. I would say we -- I won't even try to size it. It's -- there is a pretty fair amount of cost in there. But we are taking strategic price actions. We've taken some of it. But it takes so long for a lot of the pricing to make its way through this industry because of the long supply chain. So I think you haven't seen some of the pricing coming through from us and others. But it's very strategic. So it's not like we're going to whipsaw pricing all over the place.

And it's maybe more of a broad question, not just for you, but when you think about the entire industry, like how should we be thinking about pricing in the context of elasticity in the consumer? And it feels like we're going to -- we're about to go through a period of some rising inflation within the softline space. How do you guys test that? How do you kind of think about units versus price? I'm just kind of curious if you could kind of -- how is that sausage made?

Yes. Well, we've certainly looked back at our sensitivity to price reduction and price increases and tried to gauge -- tried to give ourselves a little bit of a sense of guardrails on what pricing impacts could be. We also have done some select work on that beyond that. So we've really tried the best that we can to gauge what is the sensitivity of pricing. And then we've taken a fairly conservative view, I think. I mean our general view is it's kind of 1:1. If you took average pricing in the world when prices go up 1%, volume goes down 1%. If you just said, okay, that's normally in an environment where not everybody is raising price. But I think we're in an industry where -- we're in a situation, which is very unusual, a little bit like currency swings in -- with the euro about 10 years ago, where it just affects everybody the same way. So it's a very, very equal hit. And so I think that probably will mute the price sensitivity a little bit, but we're not planning for that. Now that said, you never know. You could also have a recession on top of that. But as I said, we've got so many things to work on internally ourselves, and we really feel like we can improve the business, but I'm not even too worried about that.

Got it. Last tariff question. Do you guys have any exposure to de minimis?

No. I had to ask [ for it ] this morning at breakfast. So I know what it means, but I feel like we really...

I don't think I'd be asking...

It's so minimal, so de minimis. There you go.

Okay. Let's turn to Vans. So you've emphasized the focus returning to growth. You got Sun is there. I know you're not going to provide brand level guidance, but the impact from strategic actions rolling off by the end of the fiscal year, all the work being done. Can you kind of walk us through the progression? I know you're not going to give us a specific time line on inflection, but just remind us how you're viewing the brand from where it is today versus what the opportunity is?

Yes. I mean those kind of really aggressive actions that we took throughout our distribution really finish up in Q3 and Q4, you're pretty clear of that. So that's really our view of where we're going. And I was with Sun and her team yesterday. And I'm going through kind of long-range plans, kind of long-range product plans. And it's coming together the way I expect it to. She's really a super product person, and she's got super product people working for us. So you'll just see more and more new product roll in as the quarters roll by, more in the holiday period, more in the spring. So it's -- and it's going to be fine. It really [ fine ]. And you can already see her fingerprints here and there. If you look at the decision we made with Susan, and you'll see more on the marketing side as we go forward. So she's in the middle of the action now.

Yes, I was going to ask, can you remind us just the influence that she's able to bring like on the current product for that just hit for back-to-school, anything in the upcoming season? I think you just alluded to some of that but just kind of curious.

Yes, I can. This is -- it is a long development chain, but she -- Super Lowpro, for example, she believed in that from the beginning. So we went into -- when we really filled really well back in the early spring, we just chased like crazy to get more from back-to-school. We have it. That's not a huge product, but it's going to be a good one. And I think she's -- that's kind of her hallmark. She has good intuition, but she also really trusts the data. So she's really using both. And I think the longer she's here, the more she's trusting her intuition, which is great.

Can you speak to some of the -- just the top-down impacts to Vans that seem to be taking place? On one hand, I think that there's been editorial about skate having a bit of a resurgence. On the other hand, we're going through a bottom cycle. We're going skinny to baggy, which I believe is more of a benefit to the Vans brand. Like can you kind of unpack that a little bit and how you think about Vans underneath that?

Yes. It's -- that could be a long discussion, and Sun would be -- probably have more fun talking about it than I will. I think the Super Lowpro is the opposite of the baggy. It's really flat. And we just didn't have a real play there. And I think when we came in there, it's a really good product. It's very comfortable, too, by the way, anybody shopping for the back-to-school still. So anyway -- so that's just a really great product. And I think that both from a comfort standpoint and an appearance standpoint, it's very on trend with one part of those trends that really sleek look. The baggy look, as you said, it's still here. And the cool thing about right now is it's not like -- it used to be when we were growing up, when I was growing up, you'd have bell bottom jeans and like literally every single person would be wearing bell bottom jeans. And then that drove -- so the style was the best style. Today, there are cross currents going on. And you do have big trends, but you have counter trends. So I think those 2 trends are kind of operating at the same time right now. And that's why New Skool is now, I think our second biggest -- and on the other hand, slip-ons are also big. A lot of people don't realize, I think slip-on is either our second -- it's either our first or second largest in volume. So it's price lower, but it's another big segment. And all 3 of those are kind of operating at the same time.

Just back to the strategic actions, I think Bracken or Paul, just can you remind us what you've said about the headwinds and the rolling and the timing of it? Just -- I forget what you specifically told us, but can you share?

In terms of the tariffs?

No, no, sorry. The strategic actions at Vans weighing on.

Yes, yes. So I'm sorry. Yes, so we said it will impact Q2 pretty similar to Q1. It will be impacted again in Q3, maybe a little bit less. And then hopefully, by Q4, you've kind of anniversaried the actions we've taken.

Got it. We talked about marketing briefly, Bracken, just update with respect to those, the initiatives on the marketing side to drive traffic. You mentioned -- in July, I think it was you announced that Sza is the new artistic director. So how do we kind of align all of this to the vision? Sun is there. It's been a year or so time frame. So just a little bit more background on that partnership and how you think about the marketing spend for the brand.

Yes. I think the brand has a historical strength with guys. It grew up in skateboard and there were more boys skateboarding in the beginning, and it's kind of hung on to that for a very long time. Then it had a period where it kept that, but then it added a lot of women. That was during the real peak. And so Sun's strategy is she wants to fuel the guys and bring back the girls, and Sza is part of that. And so Sza is now in. She -- we had a meeting with her this week, and I hope I'm not supposed -- maybe I'm not supposed to say this, but I wasn't there, but we had a great meeting with her this week where she's really excited about what we're doing. And she's helping us really think through how to define Off The Wall and then what that means both from a marketing standpoint and also from a product standpoint for -- especially for girls, but not just for girls, for a new generation. So she's going to be really, really helpful and powerful, I think.

And I'd just add that because Bracken and I was [ having ] breakfast. I mean she's someone who was wearing Vans. This is not someone who just, hey, we found someone who want to work with us, I guess someone who is passionate in wearing the product before we worked with her.

And our marketing will be more than Sza. So Sza is just -- she's the artistic director, but we're doing more. You'll see more. When we get into holiday, you'll see some interesting stuff.

And within marketing for the brand, is this -- are we thinking about an increase in dollars as a percent of the Vans' revenue? Is this just the mix of those dollars?

We think we're at the right level. The industry spending levels are pretty -- you can kind of open up everybody's annual reports. You'll see the rates that need to be spent. And those are pretty healthy levels. We wouldn't hesitate to distort if we felt like, okay, this is a place where we really should spend more. But we don't really feel like that's the -- that's really needed right now. We're going to -- but we're always keeping an eye on it. So we're unafraid to push money into one direction or another. By the way, I think the Dickies sale also helps us do that even better. But we're really in a position where we can distort where we need to, but we feel like we're at about the right rate.

I would just add to that, too. One of the things we've worked on over the last year or 2 on the marketing side is be more efficient with our marketing spend, right? So we used to spend probably more than we showed on sort of nonworking media, right? The costs that go into producing media, the costs that go into all the things and not enough of the marketing spend was actually spent on working media to actually drive action and conversion and awareness and those types of things. And so we spent a lot of time over the last year or 2 to sort of work across all of our brands, not just Vans, but across all of our brands in terms of having a process that is sort of standardized across VF that allows them independence in each one of their brands on how to work. And so it's a way to actually, to Bracken's point, spend even more money on marketing that's actually going to add value without actually spending -- actually increasing the percentage you're spending, but the actual dollars and the usage of that and the efficiency of that has gone up.

Let me double down on that point because it's an important one. I think the working, nonworking, which is the industry term for that, working means like you see it because you spent money to have it seen. Nonworking would be what you pay the agency, what you pay to produce something, all that stuff. That mix was out of whack for us, and it's much better now. It's still not quite where we want it to be. So we're going to -- we still have fuel in the tank for that. The other piece is social media centric versus everything else today. And we've moved aggressively more and more social media. We're still not as aggressive as I think we will be over the next 6 to 12 months. So we've got more fuel in that tank. So I think we've got a couple of ways to keep driving increased investment in what people see, even without raising the absolute dollars.

And then on the DTC network, just to stick with Vans a few more. On the DTC network, I think you've closed about 20% of the door count over the last 2 years. Where are we in terms of that action? Are there more closures that we need to see? Or is the consolidation kind of complete?

I think we're pretty close to where we need to be. I mean it will probably drift a little bit down over time. We probably have a few more that economically don't make sense to stay open where they are. And those will drift away as the leases come up. It just doesn't make economic sense to close those. But generally speaking, I'd say we're about in the right place, but we'll be opening stores, too.

Would you wait for the Vans business to stabilize and inflect before you started to accelerate door growth there again?

Yes. We're not -- you're not going to see us aggressively open stores in the U.S. We've got plenty. It's just the net number would be. So the net number still probably drift slightly down.

Okay. Last one on Vans. Just of the overall gross margin, I believe 55% is the goal. How much of that is tied to the improvement that you guys need to see that you're outlining at Vans?

I mean I can answer that, do you want to answer it?

Yes. I mean it's not specifically tied to Vans. It's really across all the businesses. For us, it's really about kind of the big picture gross margin things we work on from a process standpoint, right? So markdown management and integrated business planning, which will help not just Vans but help all of our brands in terms of -- from a promotional standpoint, having a better promotional cadence, knowing when to mark down, knowing how to mark down, knowing what's the right way to do that. And then hopefully, that sort of gives way to integrated business planning, which is sort of this kind of our new holistic way of planning out over a longer period of time, which should help us have the right product and the right stores at the right time as well, and that will all work. So Vans is obviously a big part of that along with Timberland and North Face. But the profitability of Vans is relative to sort of the declines that you'll see in the revenue has held up okay. We've done a pretty good job of managing that.

Yes, if I could add because I was literally just looking at this last night. Don't ask me why. But I think the impact of -- Vans is a little bit more profitable. And from a gross margin standpoint, the other business, it's got bigger direct-to-consumer business in the U.S. But the impact of that is not very significant, hence, on the overall business, not a big number.

Got it. So let's switch over to The North Face. I guess how do you think about the key drivers of the brand today? And then within that, how is the competitive landscape evolving for outdoor in general in your eyes over the near term or near to medium term?

I think we have had good competitors. We have really good competitors. I think that's a good thing. Generally speaking, that's what drive -- when you have good competition -- I mean one of the most painful things I had in my last job was I just didn't really have people investing in growing the category. So it was kind of frustrating because we had to do all the heavy lifting to get the category growth. Here, you do have a couple of competitors who are really spending, which is great. On the other hand, it also keeps you on your toes. You got to be better. So believe me, we're looking carefully at what everybody is doing from a retail standpoint, from an online standpoint, from a product standpoint. And it is absolutely making us better. I was with Caroline yesterday, our President of The North Face looking at product for future seasons and then future seasons beyond that. And it's going to get better and better. So I'm really excited about it. I think you asked what are we up to there? I mean we're doing a lot of different things there. We've got -- on the one hand, North Face has a very, very strong performance heritage that -- where we kind of win consistently. On the other hand, I think we have an opportunity to be more culturally relevant, more fashion, more beautiful and stylish more consistently. And that's really one of the areas where I see a lot of growth. Women in general, we can do better there. Spring and summer, we will do better there. So we've got a lot of areas of growth for The North Face. I think in general, our Americas business is not nearly as strong as it historically as it's been in Europe and APAC. And I kind of love that situation because, boy, we ought to go and fix this because most of us are sitting here. So...

Yes, I wanted to kind of go into that. So the brand in itself, but then if you kind of like dig in geographically, there's a little bit of a different story. So it looks like the Americas is a little bit different than the rest of the world. Why -- like why do you see the challenges in the U.S. versus Europe or Asia?

Well, I flip it around. I think it's actually because we -- it's that we really did really smart things in EMEA and APAC, where we went after a little more elevation in the product. If we have a good, better, best line globally, the Europeans and the APAC region tend to focus on the better and the best and the U.S. tend to focus on the good and better. And so we're -- the good news, not to overuse the 3 terms is that we have opportunity to push that up and there's pull from the rest of the world because they really want that better and best product. So we have the product. We just have to make it available and make sure that we can bring it to market and get it sold in to the right place to buy. So -- and we'll develop more and more good product over time.

So -- sorry, is the biggest issue in the U.S., just the pricing strategy that you guys had relative to other regions wasn't [indiscernible].

I wouldn't call it pricing. I'd call it the emphasis. We really emphasize the lower mix than we did in the other regions. So they were focused more on the kind of the better and best, and we are focused here more on the good area.

And so then how does that conversation go with your U.S. wholesale partners? Like how does that conversation develop in terms of discussing it that way?

Yes, I think everybody would like us to sell more in that better and best, including our wholesale partners. I think we've got to prove it. We've got to prove that we can sell at those price points at those higher-priced products will sell. And we're not at all going to walk away from what we got. We love it. We love where we are in this good range. So it's a really good, healthy profitable business, too.

What's the time -- like in terms of that, it seems simple, but I'm sure it's not. Like what's the time line to execute and get where you need to be?

I think it's like everything in this business kind of rolls through quarter after quarter, you make -- you keep making improvements. But you can't -- especially when it comes to something like that, you can't just flip the switch and say, okay, we're something going to do better and best, and we'll drop all that other stuff. We're not going to do that. So we're going to add more product into the better and the best. We're aligning with the rest of the world on what their offerings look like. We'll have more overlap -- probably in the next few seasons, we'll have more overlap between what the 3 regions of the world are buying than we've ever had, and it will keep getting -- it will keep going up for a while.

Understood. The last one on North Face. Just you guys have talked about opportunity to kind of create this as a 4-season brand. What's the progress there, moving the brand in that direction, time line to kind of get there? Like how are you guys thinking about it?

It's such a big opportunity, and we're so close to the starting line. I think we're -- we have made really good product, but we haven't had the courage to buy it. And I mean you look back in our history, and I think we're going to change that. So it really comes back to not gambling with hundreds of millions of dollars of inventory, really believing we can do it and then marketing behind it. And so obviously, now we're in the fall, so it's -- you're in the period. But as you go into the spring of next year and the summer of next year, you'll see us do better. And then -- and we'll do it -- will be even better the following year.

Got it. I do want to touch on Timberland. I feel like the boot has been a very pleasant surprise, a strong growth in the last several quarters. I guess what is -- I mean, what is the driver there? Is that predominantly driven by the yellow boot? It seems like I see that a lot on social media and the media outlets. So how would you talk about what's going on at Timberland right now?

Yes. I think the 60th anniversary of the yellow boot and the 60th anniversary of hip hop coincided the year that I got here. And we had -- I think it was 10 different collaborations that were really creative. We put a movie out that nobody saw. I'd encourage you to try to find it on the Internet, if you can. It's a really good movie, by the way. If we can rebuy all the rights, we'll put it back out, at least for all of our investors and analysts. So you can see it's really, really good. But that sparked something at the very top of the, call it, Tier 0 at the really premium end of the industry where the cultural things move. And it probably touched a lot of the key players in the industry that affect us, people like Louis Vuitton and Pharrell. And so that generated another wave of interest at that level. That combination of things, we believe, and then probably also just a fundamental trend line that goes through every industry has driven a resurgence in the interest in the yellow boot. And now that we're starting to see it in some other things, too. Our boat shoe has also done well. Our Euro Hiker is doing well. So we're seeing it start to cascade into other things. I don't want to overstate that yet. We're going to -- we're really trying to drive that. We want that to -- we want to keep parlaying this and bring Timberland to a new level. And that is our fixation to make sure that it's bigger while we continue to fuel the yellow boot. So it's -- we've got things growing more -- beyond the yellow boot and the boots in general, but we're really trying to make sure we've got the fundamentals in place to drive that in a sustainable way. And that's the preoccupation of Nina Flood and our team at Timberland now.

Is it fair to say that of the 3 big brands that Timberland in the near term is where you have the most confidence?

I have lots of confidence in all 3 of them. Now if you ask where are they in their growth curve, I'd say, yes, Timberland is growing strongest right now. But I have total confidence in all 3 of them. And we didn't talk about Altra, which I wear just for you.

We're going to get there. The last thing on Timberland. So anything of what you guys have done to be so successful there of late that can be applied elsewhere in the portfolio, the learnings that you can kind of attach to other brands, especially on the smaller side?

Yes. I think you look at this whole kind of sparking the interest at the top of the market. We started that in Vans about a year -- a little over a year ago with OTW, which was kind of this Tier 0 kind of product. It's amazing product. It sells out immediately. Every time we do anything, whether it's a collaboration or our own product, we never make enough, and I'm always complaining about that. But we really are trying to create a strong interest. And now you're starting to see whether that's us or the cycle, I don't know, but you are seeing like in the June Fashion Week, you saw a lot of skate shoes coming from various competitors. We just announced the Valentino set of products that are going to -- they're going to sell out superfast. So I think that same dynamic that [Audio Gap] in Timberland before is happening here. Now I'm not going to promise it's going to happen in the same time frame. We'll see. But certainly, I do see some of the same things. And I also think really getting back and defining really who you are is so important. And I think we did that in Timberland in that first few months I got here. It took us a little longer on Vans. But I think we're about there now. And I think you'll see it start to flow through.

I'd say one other thing I would add, too, is Timberland has really done a really good job on the marketing side, too. Bracken mentioned before, leaning into social, leaning into sort of where sort of the young people are these days. And they've done a really, really good job of amplifying all the things Bracken talked about through marketing, which I think the other brands are getting there, but Timberland has probably been the forefront of that.

And my Altra question now. Can you talk -- I feel like I've heard you guys talk a little bit more about the brand of late on calls. You even mentioned it earlier in our conversation. Just what -- can you give us some more detail of the growth rate of Altra? Like how big can this brand be over time? How are you thinking about that?

I think it was 20% last quarter. I mean I think it's got -- I don't want to create a big expectation out there. I want to deliver a big expectation, but I don't want to create one. But I'm really excited about Altra. I think they're very -- we're the #1 trail running shoe. We're tied for #1, I think. We're one of the fastest growing, one of the 2 fastest-growing road running shoes. And we're -- I think we're in the top 10 to maybe even #8 or something. And yet the awareness is 8%, I believe, so either it's 8% or 10%, which means nobody knows about it. I mean most people in this room, if you've ever heard about Altra is probably from us. So if you know you know, so if you're a trail runner, you do know. And it really impressed me when I came to the company that some of the first calls I got were from friends of mine who said, "Oh my gosh, you've got such a great brand." I said, which one are you talking about? I thought they were talking about Timberland or North Face or Vans. Altra. I said, what? What is it? I never heard of it. So now I do wear Altras and I am a big fan. I was -- I share it left, right and center. And I think Altra really does have a lot of potential. But we're going to walk -- I should say, we're going to walk before we run. We're going to run before we [ go ] crazy and keep growing this brand systematically, and I do think it has strong potential.

Yes. No. Trail run, especially overseas, if you get the brand over in Asia, I mean, there seems like there's a lot of tailwind there. I guess my last question is just we were talking about packs a year ago. We still -- I mean, is that brand going to stay in the portfolio? Do you need all 3 of the brands to have a meaningful presence in the category? How should we think about that?

I mean I don't think you would need all 3 brands to have a presence in the category. They're quite different. Two of them are really backpack brands and the other one is really centered on backpack. And the third one is really centered on luggage and travel and so on. But they work well together, and they deliver a really nice business. When I first came here, we were really marketing -- trying to sell the Packs business. And I didn't stop that when I got here, but I was like, woo, why aren't we doing that? Because it looks like such a nice business. I mean it's relatively small, but it's got very consistent growth, very profitable, nice cash generator. It doesn't interrupt all the other businesses. It operates very independently in its own way. So unlike some of the other brands, it really does operate in a way that we can kind of fuel it by itself. It's in a category that seems like it's got a lot of potential, a lot of elastic potential. When you think about it, so few people carry -- I don't know, I can't remember the last time I saw anybody carry a briefcase. And even purses look a lot like backpacks to me and a lot of women are carrying backpacks instead of purses or backpacks and purses. So it just feels like there's a lot of potential there to elevate. There's a lot of potential there to expand the number. It's a cool, fashionable item if you do it right. I think we do it right some of the time. We can do it right more of the time. So I think it's a great category. I have no interest in leaving that one. Great.

I think we did the whole portfolio in 30 minutes. So I think we did a good job. All right. Thank you, Bracken. Thank you, Paul.

Thank you.