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

Ladies and gentlemen, thank you for joining us, and welcome to the V.F. Corporation First Quarter 2027 Earnings Call. [Operator Instructions] I will now hand the conference over to Alegra Perry, Vice President of Investor Relations. Please go ahead.

Hello, everyone. Thank you for joining us on V.F. Corporation's First Quarter Fiscal 2027 Conference Call. On our call today, we 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 we say otherwise, amounts that are referred to on today's call are all on an adjusted constant dollar continuing operations and excluding Dickie's basis, which we've defined in the presentation that we posted this morning on our Investor Relations website. We use those lead numbers in our discussion as we believe they more accurately represent the true operational performance and underlying results of our business. We may also refer to reported amounts, which are in accordance with U.S. GAAP. Reconciliations of GAAP measures to adjusted amounts are found in the supplemental financial tables included in the presentation, where we identify and qualify all excluded items and provide management's view of why this information is useful to investors. Before we proceed, I want to highlight that scripted remarks have been posted at the start of the earnings call for ease of reference during the call. The scripted remarks will be removed after the earnings transcript is made available on our Investor Relations website. Joining me on today's call are VF's President and Chief Executive Officer, Bracken Darrell, Chief Financial Officer; Paul Vogel, and Chief Operating Officer, Abhishek Dalmia. Following our prepared remarks, we'll open the call for your questions. I'll now hand it over to Bracken.

Thank you, Allegra. Hello, everyone, and thank you for joining us. Before we get into our call for the quarter, let me talk about our CFO transition. As you know, if you read our release this morning, Paul Vogel will be stepping down and Abhishek Dalmia will be taking on the newly combined role of Chief Financial Officer and Chief Operating Officer. Let me start with Paul. I'm so thankful to Paul for being my partner these past 2 years. He's played a key role in dramatically improving our balance sheet, lowering our cost base and returning us to growth. Paul should be very proud of his accomplishments and I know he is. He's also been a good friend and partner to me and the entire team, and we're going to all miss him. Paul, I know you want to say a few words.

Thanks, Bracken. As Bracken shared, after a lot of reflection over the past several months, we decided it's the right time to transition in my role. Over the past 2 years, I've become very passionate about the brands within VF, and I've been driven to execute on the transformational work underway across the company. That work has required a significant amount of time away from my family who have remained on the East Coast. As I looked ahead and discussed with Bracken, the ongoing expectations, we decided now would be the right time for VF to transition to a new CFO. I remain confident in the company the strategy, the progress we are making. In fact, I lead this role with great confidence in where VF is headed. Over the past few years, we've made meaningful progress, stronger financial discipline, improved execution, a significant reduction in debt and a sharpened portfolio. We returned to growth for the full year in fiscal '26 for the first time in 3 years expanded margins materially and reduced the leverage ratio by 2 full turns in 2 years, and I'm confident we will hit our previously provided guidance for the medium term. I'm also very pleased that Abishek will be stepping into the CFO role, combining with his current remit as COO. He understands the transformation agenda. He understands the operating model, and he brings a powerful combination of strategic, operational and financial perspective. I believe he is the right leader for this role and the right partner for Bracken and the leadership team in this next phase. On a personal note, Abhishek has been a true partner to me, and we've become real good friends and how a lot of fun working together. Over the next quarter, I will work with Abhishek to help ensure a smooth and thoughtful transition, and I'm committed to doing everything I can to support the team during this period. And last, I want to say thank you. First, thank you to Bracken for his partnership, trust and leadership. It's been a privilege to work alongside him during such an important period for VF. Thank you to the Board and the broader leadership team for their support and collaboration. Thank you to our shareholders and analysts. And most of all, thank you to the finance organization and to the teams across VF. Serving CFO of VF has been an honor. I'm proud of the progress we have made, and I'm confident in the company's future. And now I'll turn it back over to Bracken. Thank you, Paul. And thank you, Paul.

I would have put the rest any rumors there might be about the suspicious coincidence that Paul's move back to Philadelphia and Lebron James moved to Philadelphia in the 76ers. They seem to be uncoordinated, although we will try to confirm that over time. Now for Abishek. We are really fortunate to have 1 of the most knowledgeable and impactful people in our industry as COO. After stance at Dell and Lululemon, and I didn't mention GE in the beginning of his career, Abhishek spent 7 years of BCG, working with almost every major company in our industry on a very wide range of projects. And that has already paid big dividends of VF. As he is reengineered first, our technology organization, then supply chain and soon finance. He's also been a partner for me in our strategy and execution across the business. He's a particularly good fit for the CFO role as an expansion of his current role. You'll soon see though, he's not going to be a COO who just adds finance. He will be a CFO who really understands at a practical level how to create total shareholder value. He deeply understands brand value creation. And the combination of these roles will drive sustainable and profitable growth, agility and cost efficiency. As the business evolves into the next phase of growth, his ability to blend financial acumen with change management and transformative thinking will be just the right cocktail for VF's ongoing transformation as we continue on our way to becoming a high-performing, high-growth business. Abhishek, I know you'd like to say a few words.

Hello, everyone. Thank you, Bracken, for your confidence and for the opportunity to take on this expanded role. I'm honored by the trust you and the Board have placed in me. I also want to thank Paul for his partnership and friendship. He has helped guide VF through an important period of transformation and has developed strong finance leaders. I look forward to partnering with this talented team as we enter our next phase. I chose to join VF a few years ago because I love our brands, and I believe in the long-term potential and success of this company. Going forward, my commitment is to ensure that every dollar of capital is deployed where it creates the greatest long-term value. That means maintaining discipline in how we invest, strengthening returns across our portfolio and balancing growth, profitability and cash generation to deliver sustainable TSR. I'm energized by what lies ahead in this next phase, as I continue to work closely with Bracken and key leaders in brands and commercial to make VF a high-performing and a highly profitable growth business. Now back to you, Bracken.

Thanks, Abhishek. Now let's talk about the quarter. The first quarter was a solid start to the year. As a result of this start and better visibility into the rest of the year, we're raising our full year fiscal '27 outlook from 1% to 2% growth to 2% or better. We guided last quarter, we said you could expect another year of growth. Now you can expect a year of acceleration, albeit modest so far, but this is just the beginning of that. First quarter revenue was flat to last year, ahead of our guide. Q1 is typically a negative operating income quarter, but Q1 operating income was also slightly better than we expected, even though we invested in growth across multiple dimensions. Turning to the individual brands. The North Face grew 4% in Q1. That was stronger than our expectations of a flat quarter that we shared with you earlier. You might recall that the primary driver of our flat quarter expectation was orders that would normally have occurred in Q1, actually shipped in Q4 last year. So we expected a stronger Q4 would result in a lighter Q1. As in the past, this year, we have timing ships across the quarters. In that vein, we expect Q2 to be flattish versus last year on North Face. However, we expect the full year to be roughly in line with last year's growth rate. Let me repeat that. We expect the full year to be roughly in line with last year's growth rate. From a product standpoint, The North Face growth was led by transitional outerwear, shells and equipment. And we barely tapped the many opportunities to bring in strong spring and summer categories in the years ahead that we don't do much in today, which makes a solid quarter like this even more satisfying. Imagine what it will be when our assortment in stores and online is much broader and appropriate for warmer seasons. In footwear, the Altamesa Version 2, which I've actually been wearing all week, I've been wearing the 500 is absolutely amazing. We launched during the quarter with a very strong debut across regions. Now let me give you a little taste of what's coming for The North Face in Q3 and Q4, looking into the back half of the year. As I mentioned last quarter, The North Face is the exclusive performance apparel sponsor for the U.S. Ski and Snowboard team. The athletes will wear our product across all major events, including World Cup and, of course, the Olympic Winter Games, and official training caps between now and through 2034 and beyond, we hope. The first drop of the U.S Ski and Snowboard apparel is this winter. I'm wearing one of the T-shirts underneath this [ year ] right now. We'll be upgrading our largest single icon, the [indiscernible] from Summit Series all the way down through all of our lifestyle. This 1 has an innovation twist as well, which I will share with you later. From a marketing standpoint, there's also there's also something very exciting coming out. We can't tell you exactly what it is, but keep an eye out for your local IMAX theater, just watch for developments ahead. Timberland revenue was up 3% in the quarter, both DTC and wholesale grew on a global basis. While regional performance was driven by continued strong growth in the Americas, up 10%. As expected, at this stage, the 6-inch premium boot is the growth engine. While behind the scenes, our initiatives to build and diversify around this strength are taking hold. Outside of the boot, shoes continue to perform strongly in all regions, led by the Boat Shoe. As we get into fall '26 season and beyond, you'll begin to see more of the new product lines being developed from below the ankle to sneakers in footwear and across apparel. Alongside those product initiatives, we continue to develop the brand distribution network. And for the first quarter, we opened 3 new full-priced DTC stores in the Americas, taking the total number of full-price stores to 14 in the region, and there are more to come. We're driving brand energy with our social-first marketing strategy, as we talked about before, while leveraging the brand's cultural relevance. Search interest was up in all key markets. The brand continues to play a central role in big cultural moments. For example, during the quarter, the yellow boot became a symbol of New York during the New York's magical New York Knicks championship run this year and an associated social media post generated the brand's highest engagement ever. We expect another good year of growth for Timberland as we continue to take steps to unlock the true potential of Timberland over the next few years. Now let's talk about Vans. Q1 revenue was down globally by 9% year-over-year. We expect a similar trend in Q2. We began signaling a few quarters ago, the business would turn around first in DTC then wholesale, and we focused on the Americas. And that's exactly what continues to happen. We expect to be a little bit better in Q1 than we were. We expect it to be a little bit better in Q1 than we were. But this quarter doesn't at all change our indication of what we see for the full year. To that end, let me start by giving you a little more data than you've had before on our DTC. I'm going to focus on the U.S. where half our business is, but the strategy is the same globally. Remember, we have more flexibility in introducing new products into our own DTC channels that we do in wholesale, just takes more time. E-comm is where we're starting to see accelerated growth. Now let me talk about our fleet of stores, focused on the U.S. where most are. Almost 60% of our comp stores are now flat to growing in Q1. There are stubborn stores we continue to work on. But you can see what our -- the e-com and the majority of our fleet is now positive in the U.S. So what's going to change between the first half of fiscal '27 and the second half fiscal '27 at Vans. In addition to the improvement we've seen in e-com in our stores, wholesale is going to be a lot better around the world. We're confident because we have much better visibility into our wholesale partners' plans. This is 1 of the things that gives me confidence to commit to a better second half of Vans. In fact, for Vans as a whole, while the first half revenue will be down about 9% versus last year, we expect second half to be down 2% or better versus last year. Let me go further on Vans now. There have been many green shoots in the past few months. DTC in the Americas continues to grow, as I said. We have more and more new products that are generating energy, excitement, engagement and sell-out, complete sellout. The press and social media analysts have published many headlines like Vans hot street is only getting hotter, and Vans might just be the footwear brand of the year. The brand is even inspiring luxury brands like Louis Vuitton, Prada, Dior and [ Memo ] as they see the energy move to Vans silhouettes. And speaking of brand energy, in just its second year, the Vans work tour will have almost 600,000 attendees across its 6 venues, making it the -- for sure, the largest rock festival in North America and maybe Tide or 1 or 2 or 3 for the largest music festival in North America. And when you go, you see 2 out of every 3 people wearing Vans. Our focus on innovation is driving consumer demand. We continue to reinvigorate the original icons. Authentic had another double-digit quarter. Slip-ons grow. Old Skool continues to benefit from Peralized, distressed and collabs like the Travis Barker, colab all resonating and achieving a very high sell-through. The latest example just last week was the Souvenir asphalt collection, which is Old Skool, we sold out in 30 minutes. The team is also putting out powerful new silhouettes, like loafers and others. One of the things we're under leveraging as some of this incredible energy we're creating we can do a better job of having sufficient volumes of those hot styles of our icons and entirely new silhouettes to better capitalize on demand. We're working on that. But overall, our energy strategy on our DT channels is starting to work, and we're going to keep going and build on this. Wholesalers will be bringing in more new products as we approach the holiday season and into the spring. We continue to be very optimistic on Vans. Beyond the top 3 brands, we're fueling the engines that are showing strong potential among the smaller brands, and there are a growing number of those. Altra?is the most visible example Altra?continues to deliver, building on a strong performance last year and progressing towards another year of powerful growth. Franchise styles, including Lone Peak, Torin, [ Experience Flow and WILD ] continue to perform well. We're continuing to invest in brand awareness, which remains low but is growing. Altra?plays in a very large addressable market. For perspective, we're a leader in trail running, but rotary running is 10x as large of a market. Even though we've only recently gotten seriously into road running, over the past few quarters, road running has become larger for Altra? than trail running for the brand. As I've said before, we believe this brand will be a $1 billion-plus brand over time. To conclude, I'm confident about the year, and we're raising our full year guidance as a result of our better visibility into the second half and our Q1 performance. With that, I'll hand it to Paul first for more financial depth on this quarter, and then Abhishek Dalmia for the forward-looking guidance for the next. Paul?

Great. Thank you, Bracken. Turning to our first quarter results. Q1 revenue was approximately $1.7 billion, flat year-over-year and above our guidance of down low single digits, and operating performance was slightly ahead of guidance. By brand, as Bracken said, The North Face grew 4%, Vans was down 9% and Timberland was up 3%. In Q1, Timberland's growth was impacted by the ongoing conflict in the Middle East as well as ongoing work with 1 of our distributors. This was roughly 3 points impact to Timberland in Q1. From a regional perspective, growth in the Americas was up 4%, while EMEA was down 7% and APAC was up -- was down 1%. And lastly, by channel, DTC led us up 5%, while wholesale was down year-over-year at minus 4%. Adjusted gross margin for the quarter was 54.9%, up slightly over last year. Our core underlying gross margin is actually stronger than it peers as this quarter's margin was impacted by 140 basis points as a result of unfavorable FX. As a reminder, there's roughly no incremental advantage or disadvantage of tariffs in Q1 this year versus Q1 last year. SG&A stepped up year-over-year as we deliberately invested in the business to drive growth. As we signaled in May, we are making first half investments in brand building initiatives. The $225 million of structural SG&A savings since fiscal 2024 remain in the run rate. This has been a choice to reinvest on a lower fixed base to drive growth. Our Q1 adjusted operating loss for the quarter was $95 million, slightly ahead of guidance as a result of the higher-than-expected top line. Finally, adjusted loss per share was $0.27 versus $0.25 in Q1 and of last year. The tax rate was approximately 11% in Q1, and there is no change to our full year outlook for the tax rate in the low 30s. On the balance sheet, we continue to strengthen our position. Inventories excluding Dickies and FX, were down 4% and net debt was down $1.1 billion or down 20% versus last year. Free cash flow was up approximately $75 million in Q1 year-over-year. This includes approximately $50 million benefit from tariff refunds. I'll now turn the call over to Abhishek, who will walk you through our guidance for Q2 and the full year. Abhishek?

Thank you, Paul. For full year fiscal '27, let me start with key metrics. First, on revenue, we had guided to up 1% to 2% and now expect to be up 2% or better versus last year. Second, we continue to expect our operating margin to be approximately 8% for the full year. Third, we expect free cash flow to be flat to up versus last year, with operating cash flow up over -- year-over-year. As a quick reminder, this excludes any potential net benefit from tariff refunds during fiscal '27. This also excludes the $100 million net impact of the pension termination that we received in fiscal '26. And finally, we continue to expect our year-end leverage ratio to be between 2.6 and 2.9x. As you know, it's not our standard practice to give you detailed brand guidance. But given we just raised our revenue guidance, we want to give you some additional color on the top 3 brands for the full year. For The North Face and Timberland, we expect the full year to be in line with their respective growth rates from last year, plus or minus a point or 2 on either side. For Vans, we continue to expect revenue trends to improve relative to last fiscal year, down mid-single digits. As you heard from Bracken, we expect better trends in the second half and expect revenue to be minus 2% or better for Q3 and Q4 combined. Let me share some details on the second quarter now. Revenue growth will be approximately in line with Q1, and operating income will be broadly in line with last year. Let me break down the key components for you. For our 2 largest brands, The North Face will be flat to slightly up year-over-year in Q2. And as mentioned before, this is primarily driven by wholesale timing. Vans' Q2 performance will be similar to Q1 of down 9%. Within this number, Americas DTC will continue to grow as we indicated in May with continued improvement in DTC for other regions. As you also heard from Bracken, we expect the wholesale business to improve in the second half, resulting the brand delivering a mid-single-digit decline for the full year. We expect gross margin to be up versus last year. On SG&A, as you heard from Paul, we continue to make brand building investments specifically in DTC and marketing that will impact the overall SG&A in Q2 year-over-year. These Q2 gross margin and SG&A movements are contemplated within our full year operating margin guidance of approximately 8%. Finally, Bracken, Paul and I have been working very closely over the last few years on VF's transformation. We are on track to achieve our medium-term targets. Let me remind them. First, and operating margin exit run rate of at least 10% in fiscal 2028. As we clarified on our last call, it really means that we'll be 10% or better for full year '29; and second, a leverage ratio of 2.5x or better by fiscal '28. So to conclude, we beat our first quarter expectations and raised our full year revenue guidance. We gave you a little more of the runway on Vans for rest of the fiscal year and also additional color for The North Face and Timberland for the full year. We confirmed our guidance on operating margin, free cash flow and leverage and have clear line of sight to our medium-term targets. We are well on our way to becoming a high-performing high-growth business. And with that, I will hand it back to our operator for your questions. Thank you.

[Operator Instructions] Your first question comes from the line of Brook Roach with Goldman Sachs.

Abhishek, Paul, best of luck in your next chapter, and Abhishek congratulations on the expanded role. I was hoping we could unpack the trends that you're seeing in Americas wholesale at the Vans brand this quarter. Bracken, I think you mentioned in your prepared remarks that you were hoping to be a little bit better than where you were. Can you unpack what transpired in the quarter versus your expectations? And then also give us a little bit more color on what gives you confidence in the improvement and the magnitude of the improvement that you're expecting to see into the back half, perhaps you could give us a little bit of color on what you're seeing in the order book by geography and the types of products that are driving that inflection?

Thank you, Brooke. And it's good to hear from you. Yes, I'll go right into all those questions. So first, in terms of our performance in Vans in North America, we've been saying for a while that DTC is going to turn first in the wholesale will follow. And that's exactly what's happening, exactly what happened in Q2. Our wholesale business continues to be a lot weaker. I mean if you look at our global number, I'll step up to the global number. If you look at that global number for the year, if we're -- or for the quarter, if you're -- if we were telling you we delivered 9% down overall, it was a lot better than that in our DTC globally and a lot worse than that in wholesale globally. And I'm talking a lot worse. Now our sellout is not that bad in wholesale. So the actual sellout is better. There's some destocking that's going on probably ahead of buying in new inventory. In terms of what are they buying? One of the cool things about having your own DTC, and that is most dramatic for us and Vans in the Americas is the fact that we have a shorter path to market, and we can be very choiceful about what we put out there. So if you go into our stores or certainly if you go online, you'll see a lot of new products from us now. I hope you can see that when you walk into our store, but you could certainly see it online, I encourage you to do it today. Those are selling very well, as I said in the script in the beginning, they're not in wholesale and anywhere near the same volumes as they are in DTC. So that's coming. Why do we have confidence in wholesale improving as we go in the back half of the year, both in the Americas and around the world, because we have [indiscernible] order books, I'm not going to specifically go into order books, but I will say the discussions we're having with our wholesale partners around the world indicate that we're going to have a strong turn in wholesale in the back half.

Your next question comes from the line of Adrienne Yih with Barclays.

And congratulations to Abhishek and Paul, thanks for the partnership. It's been really wonderful working with you. So Bracken, you had talked about I mean it's very clear that global luxury is kind of picking up some queues from some of your key styles, the Authentic the Slip-on and skate-inspired. So it's pretty flattering. But your prices really haven't changed over time. And I'm wondering how you think about kind of materially building on this emerging brand moment. What do you do kind of in that competitive, excuse me, competitive atmosphere. And is that an upside opportunity for the back half. Also on this 8% operating margin, Paul and Abhishek, can you talk about kind of the upside and downside risks -- you're putting a lot of SG&A into kind of the operating margin. Could you pull back on that? Or is this really about kind of upside selling in the back half?

Okay. I'm going to take the first and then I'm going to let Abhishek answer the second one, so it's a forward-looking comment. In terms of -- 1 of the things I love about coming into this company, and it makes me so excited to walk in here every day is the fact that we serve millions and maybe even hundreds of millions of consumers as opposed to a fraction of the Earth, which is what luxury is doing. And it's wonderful, though, to be viewed as potentially competing with luxury because they sell at 10 to 20x our prices. So you're right, this is a moment where luxury is going into a lot of our silhouettes, an increasing number of our silhouettes. And that is not only flattering, but it's very good for the brand and brand heat. Now how do we take advantage of that? So far, as you said, we have not raised price. We don't have a plan to raise price this year. It's certainly always an option. What we really are doing though is trying to move our mix a little higher. So you'll see us emphasize more premium styles not only collaborations, but in our own premium styles and then make sure we're delivering growth. We got in this -- we're back here. This is a very -- this business is very sensitive to growth. So as we start to grow on Vans, you're going to see the profitability will expand rapidly as we know. So there's a lot of leverage there. Abhishek, do you want to take the second?

Yes. First of all, Adrienne, thank you for the warm welcome, and I do look forward to working with you as well. To your question, first up, we don't see the risk to the guidance that we have given on the operating margin. However, the geography of that 8% might actually be more driven by gross margin because we are open to making discretionary investment in the SG&A as called out by Paul and Bracken in the previous call. So we definitely feel very confident on delivering the operating margin.

Your next question comes from the line of Michael Binetti with Evercore. .

Guys, can you hear me okay?

Yes, we can, Michael. Good to hear from you.

Let me add my congrats Abhishek and Paul. Really appreciate the time, Paul, look your next adventure. Let me ask you on Vans, maybe in Europe, I'll just ask a near-term question here. Still a pretty tough quarter after 3 years of declines there. Maybe just some color between wholesale and D2C, what's going on in that region? Obviously, your comments on what Vans will be doing globally in the second half are interesting. That's 1 market that I'm interested to hear how that will go through that transition in the second half. And then maybe we could just back up for a minute and take a historical look at Vans margins. A previous regime told us long ago that Vans had a low mid-20s operating margin at its peak. Today, it looks like it's lower mid-single digits. As I look back and think about it, maybe there's a diagnosis that R&D and marketing investments are far too low to drive that brand. Can you just help us understand a little bit better today how much of those investment lines have changed as we look at the current margins in the business. I think that would really help us understand the margin opportunity from here. It seems like a lot of it is the gross margin, but maybe some of it is from the scale of the business and your confidence that you have the right size overhead from the medium-term top line outlook?

Really interesting question. So first one, your question, what does Europe look like from a DTC and wholesale from a DTC and wholesale standpoint relative to the U.S. similar I would say, behind the U.S. from a timing standpoint, similar in trajectory, same thing is happening. So DTC is outperforming wholesale by a wide margin. E-com is positive this quarter. So it's already turned positive there and the brick-and-mortar is improving. So overall, it's a very similar profile. And then wholesale is way south of that, as I said in my last -- the answer to Brook's question. So I think it's very, very similar. You want to answer the second one, Abhishek.

In terms of the overall investment in the shape, we are continuing our investments in R&D. Product investment is a big part of the investment. We are obviously with the momentum that we see in the brand marketing continues to be an area where we are doubling down, but more the right balance between brand and performance. We have taken a significant cost takeout in this part of the transformation. So I do, Michael, to your question, we definitely see opportunity both in gross margin and SG&A leverage on the bank side.

Yes. I would just add to that. I think -- I mean, underneath your question is, can you expect the profitability kind of from the peak that we had on Vans in our future. I'd say, 2 years from now, 3 years from now. The answer is probably no. I don't -- I think we milked it too much. And we got to the point where I believe there was a point where I'm not sure I'm really doing a pure P&L here, but where we were making kind of 20% plus on operating margin, that's probably too high for a business like that. So we're not going to do that. On the other hand, I do think we're -- we'll spend a little ahead on marketing, maybe product development, but at least marketing. We're probably spending ahead of what we'll do on a rate basis for the long term. So the profitability is going to keep going up. And on top of that, you're going to get leverage on all the SG&A. So I think you're going to see -- we'll see the profitability to get to a really attractive level over the next several years, but probably not back to where we were 5 years ago.

Your next question comes from the line of Laurent Vasilescu with BNP.

And much appreciate for all the color this morning. I want to ask quickly a near-term question, if I may. I think it's very helpful that you provided color on the brands, particularly for the quarter. I think you said Vans down 9%, [ TNF ] flat. I'm curious -- how do we get to overall flat revenues for 2Q? I mean, it would imply that Timberland needs to be up meaningfully. I'm just trying to under square that away. And within that, Bracken and team, I would love to hear what you're seeing in terms of wholesale demand in the Americas for the Timberland brand. And then 1 quick question. Paul, you've been very, very helpful over the last 2 years. And last quarter, you were very helpful in trying to break out the benefit from the receivables for the gross margin. I'm curious to know if you saw that in the 1Q gross margin, if you can potentially help us with the bridge for the gross margin of up 10 bps.