VF Corp (NYSE:VFC) Q1 2021 Earnings Conference Call - Final Transcript

Jul 31, 2020 • 08:30 am ET

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VF Corp (NYSE:VFC) Q1 2021 Earnings Conference Call - Final Transcript

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Executive
Steve Rendle

ensuring that our company is one where everyone feels welcome, supported and inspired to be exactly who they are.

Before providing an update on the current environment and how VF is navigating the unique challenges and business disruptions presented by COVID-19 and recent protests across the globe, I want to again express my deep gratitude for the way our management team and associates around the world have come together and responded to these crises. Our teams have moved with speed, agility, determination and focus, and I'm humbled to have the opportunity to lead VF during this time. We have prepared ourselves well for times such as these. VF is built for this. Our strong brands, coupled with our purpose-led, people-first approach and our financial and supply chain disciplines and our fortress balance sheet allow us to weather any storm. I'm confident that VF will emerge in a position of strength, fueled by the clarity of our strategy and our portfolio and business model transformation, which will position us to thrive and deliver accelerated growth and value creation in the years ahead. And now turning to our business. Our first quarter results were better than expected, led by our international and digital platforms. Scott will go through the details in a moment. Through the end of June, with the majority of our stores reopened, we saw encouraging signals as consumer spending in core outdoor, active and athletic categories was resilient. Our business fundamentals continue to improve throughout the quarter, with particular strength in our digital business growing 81% and our China business returning to growth one quarter earlier than our expectations. This improving trend has continued in July, despite some store reclosures in some parts of the U.S.

We're in the midst of an unprecedented change across the retail landscape, and consumer trends and behaviors are evolving faster than ever before. Participation in outdoor activities and consumer interest in outdoor exploration is increasing. Health and wellness and the pursuit of a more active lifestyle is accelerating. Casualization is a trend likely to be a mainstay in post-COVID world. There's an elevated focus on environmental sustainability that will lead to a greater commitment to combating global climate change. And there are growing expectations for purpose-driven actions from brands to care for their local communities and address issues relevant to their consumers. But these changes didn't start because of COVID. These trends were core underpinnings of the strategy we laid out in 2017 and updated last fall in Beaver Creek, and these trends have influenced our portfolio decisions over the past several years and continue to guide our acquisition agenda. However, there is no doubt that recent events will serve to accelerate these consumer behaviors, leading to a dramatic reorganization of the marketplace. Here's the good news. We believe the set of actions we laid out a few years ago have helped to reset the VF Foundation to capitalize on these new realities. We believe the portfolio we have today sits at the