Third Bridge 专家称 The North Face 中端定位受挤压、VF Corp 长期增长目标偏乐观

[[00:01:24]]
What is your current perspective on the outerwear and technical apparel industries? Can you highlight 2-3 important trends to monitor?

[[00:01:38]]
The first thing that we've been seeing for the last, I'd say, 2-3 years is that there's definitely a sign that the better level or what we'll call the middle of the market is getting squeezed. I've been seeing premium brands like Arc’teryx and others that have USD 500, USD 600, USD 700 price points and up continue to grow and dominate as is the value chain. Think about things like good-level, off-price outlets, but the brands that are sitting in the, as I call it, better level or the middle tier, they're the ones that are losing mindshare of the consumer and shelf space at retail. I've just noticed that consumers are really losing interest in anything without a clear price value differentiation, especially when it comes to technical product. That's the first.

The second is that the boom of DTC during COVID has definitely had some interesting implications on wholesale. What I've seen in the last several years is that wholesale doors are… Of course, there's a consolidation happening, but there's shrinking and consolidating of the bigger accounts, so brands like The North Face and others are being forced to really focus on their own retail and digital footprints, if you will, so that they can give the consumer a controlled experience, and so in saying that, I guess, I would say that those brands are thinking about how to grow DTC specifically as wholesale is getting harder and harder to get product placed in.

The third is that there's a really interesting conversation right now that's been happening, and I think it started with Vuori about 5-6 years ago, and it's around versatility, but it's made its way into the technical space where we're starting to see that fewer people are seeking a very specific jacket. As an example, a hiking specific jacket. They'll want a hiking jacket, but they also want the jacket to be able to travel in, walk in and use on their day-to-day commute, so versatility is a key trend that we're seeing in the market. Those would be three of them.

[[00:04:14]]
With macroeconomic pressures persisting, do you anticipate broad demand impacts through the rest of 2026? Which market segments do you expect to be most or least affected by discretionary spending pressures?

[[00:04:32]]
I would continue to expect that the best or what you might call the premium technical outerwear brands like Arc’teryx and others in that zone, they're going to continue to grow because they have a consumer that doesn't really have price resistance the way that other brands do, but I'd also continue to see what we'd call workwear or true functional like necessary categories like kids and cold weather, those will also grow because they have a person on the other end of that purchase that is buying them with a critical need. I think the most concerning areas of vulnerability are going to be that mid-tier better-level apparel that's not technical enough, maybe a little slightly fashion. Even when you look at footwear and you look at things like Vans, where it's a little more trend forward where a consumer that's buying that product is maybe lower-to-middle income, they're going to trade down or just not buy as much. Back-to-school is going to be really the tell for brands and brands are waiting to make adjustments to their fall holiday '27 assortments based on what's going to happen at this back-to-school as well as this holiday. Things like pricing and quantity of buy and introduction timing, that will all get reconsidered based on what happens in the next several months.

[[00:06:08]]
How is The North Face positioned against that middle-tier pressure you highlighted, and what parts of its assortment is most and least exposed to these pressures?

[[00:06:24]]
The North Face's biggest asset is that it has sat squarely in the middle of what you might call mainstream culture now and really credible authentic technical gear because it's athlete-tested, athlete-proven and North Face [sic] does a great job with their athlete assets. It's authentic-enough and people-trusted-enough for somebody to go out on an expedition. Also, you see, especially in the US and the UK, it's very accessible and it's stylish-enough that people will use it as streetwear. What we've seen over the last several years is that iconic product like if you think about the Nuptse, which is the puffer, people will call it, the Denali Fleece. They're very recognised. They're known by name, and that's a huge advantage. The thing that's interesting about The North Face now is that they've positioned themselves as for everyone, and that's probably also a huge weakness because it's better, it's not best, like Arc’teryx, and so that's what's been bifurcating the market and that middle position is just getting attacked from everywhere.

[[00:07:43]]
Is The North Face in that middle tier that's at the greatest risk relative to the higher-end brands such as Arc’teryx?

[[00:07:53]]
It is. I'll also say, at the same time, The North Face has an extremely incredibly-technical line called Summit, which is a very small subset of the products that they make. Those products are what athletes would wear on expedition, alpine climbing, and they would literally go head-to-head with Arc’teryx and any of the better-known brands but it's a small percentage of their business. It's so small. One of the things they're going to have to consider is really marketing and getting after that part of the business to grow their technical credibility in a more significant way.

[[00:08:42]]
Do you anticipate The North Face gaining or losing market share over the near term? How can the company improve its positioning against premium technical brands such as Arc’teryx?

[[00:08:58]]
I tend to, unfortunately, lean toward them losing share in those segments that matter most for long-term brand strength, specifically with technical athletes because for those individuals that are demanding performance and looking to them for credibility, I just don't see them growing because of what's happening with specifically Arc’teryx. I also think when it comes to the women's piece of this, they are in a real conundrum right now because there are now other brands like Halfdays, as an example, which is another Colorado-based… I can't even call it a start-up now, they've got products in Nordstrom, but they are really attacking the women's market in a way that North Face hasn't prioritised. I guess if I come back to the question, I'd say North Face is going to grow volume at the volume level, the opening price point, but I think their position is like… We used to think about North Face as the go-to outdoor brand, especially if you were in the US or in the UK, and I think that's starting to slightly erode a bit with these other brands coming in. They're also doing a lot more commodity product like when you think about how much tee business, how much opening price point cotton fleece business they do. It really takes away the light that should be shined on more of the technical side of their business.

[[00:10:56]]
What is the threat of market share erosion from smaller start-up or ankle-biter brands such as Halfdays? As a whole, do they present a significant threat to The North Face's market share?

[[00:11:12]]
They do. I love that you used that term because I use the same term. It's what Lululemon was 20 years ago to Nike, an ankle biter, and look at it today. The thing about Halfdays specifically, if we stay on that is several years ago, when I was at The North Face, we noticed, "Okay, this brand is growing. It's very, very small." At the time, no one cared, but that gave them the space to be able to get the right talent in, which they got a lot of their talent from The North Face as well as other technical brands, and they are so community-driven, more like social-first cultures, and that's been reaching a very young, more digitally-native consumer. I think that is the risk to North Face because now they've got this community-led… I should have said just this community that is more the next generation of consumer that North Face needs to be really speaking to, and those consumers are going to these smaller brands.

[[00:12:23]]
How would you separate The North Face's brand positioning in the US and internationally, and which regional nuances would you highlight when growing the brand?

[[00:12:39]]
Interesting question. In the North America today, I would classify The North Face as a more commodity product that is sitting squarely in the middle. In the UK and other parts of Europe, they have still done a great job of managing it as a technically-credible outdoor brand, Hiking, alpine, all the technical outdoor expertise spaces, North Face is still a solid player. In Asia, you definitely see, especially in the China market, they've got a consumer that is more streetwear. They've got a different part of the line over there that they create called UE, Urban Exploration. Then in Japan, because of the Goldwin work, they're doing things that are highly technical, but definitely street-smart. There's some very interesting differences with how the markets are positioned. Starting probably 4-5 years ago with leadership that came in, they were trying to get the positioning more aligned across the globe. I still haven't seen that happen. I still see very distinct differences in how the consumer is looking at the brand and how they're mapping their marketplaces.

[[00:14:23]]
Is that global brand alignment ideal in your opinion? How does that compare with the growth ambitions for the brand?

[[00:14:35]]
They definitely need to consider the nuances of the regions. It's what the best brands do because it's very hard to get 100% alignment across the globe. As long as they continue to set up their regional merchandising organisations, their regional brand organisations, I believe that will help their aspirations, but if they start to create a singular global line and not allow regional nuance, if they start pumping assets through globally and they don't allow for regional nuances that they need, that's what's going to get them into trouble.

[[00:15:24]]
How attainable is VF Corp management's longer-term goal to double the North Face brand, and how long could that take?

[[00:15:38]]
The comments that Bracken are making about the specifics of the timeline, I don't personally believe they're attainable. They've had an ambition to double apparel and equipment, and I think they said triple footwear, if I'm not mistaken. It feels pretty exaggerated. One of the things that I had spoken with about colleagues when I was there and even since I've left is that we talked about how VF pitched an almost identical strategy probably 15 years ago, I want to say, and the brand didn't hit that. When I look at statements made like that and targets thrown out, I feel like they're more aspirational marketing, honestly, for the investment community than I've seen in substantiated strategy or operating models. My view is that doubling apparel is possible over a much longer time horizon, probably 10 years if The North Face makes apparel more premium and if they take footwear share, but tripling footwear share from the starting line of where they are right now against Salomon and Hoka and Arc’teryx and even in their own house, Altra, I think it's way too much of a stretch. I'd also say that doubling their equipment business, which is mostly bags, it's really, I believe, unlikely given that it's a smaller, slower growth category to begin with.

[[00:17:31]]
What factors will drive The North Face's growth over the medium term? What are the primary obstacles to doubling the brand?

[[00:18:02]]
I'd say they really need to look at their category mix because technical outerwear is what defines their positioning. Technical outerwear for this market is the reason that your brand has any right to charge a premium at all. There's a risk if that part of the business erodes and you're just left with the commodity pieces and more of the fashion lifestyle, that's the risk. I really believe they need to do a better job of innovation and pushing technical outerwear. I'd say the second thing that they have to do is they have to be better within their own DTC channels. There's a lot of energy that needs to go to DTC, and it's been a huge area of discussion. DTC has showed a lot of global improvement, particularly for The North Face, but at the same time, they also have to grow wholesale, and that has been tougher and there's so many competing technical and lifestyle brands fighting for the same limited floor space that you think about REI and Dick's Sporting Goods and JD Sports in Europe and speciality retailers. The North Face has to win on better product rather than this historical assumption or this default that every outdoor consumer needs a North Face.

I believe a better way for them to win is to start even thinking about creating exclusives for wholesale so they can have a reason for these wholesalers to grow because these wholesalers, they don't want to compete against other retailers. They're getting exclusives or early launches and things like that. Then I'm going to go back to DTC and say, DTC lets you control your own pricing integrity and you get to tell a fuller brand story and you get to capture the fullest extent of your margin, so I would expect that their channel mix, if it continues to go towards DTC and own retail and they can really tell great stories, that is going to help them win in the marketplace because they can't tell those robust stories in wholesale. At the same time, they have to keep the lights on in wholesale. Maybe one of the risks is if you go to the place of what they've been doing lately, which is putting a lot of good-level product out there and filling their outlets and doing things with opening price point retailers, that's super risky when you pump a lot of product out there at the good level, but they can drive massive scale, and so that's why they're doing it to be able to hit some numbers. They need to really wash a lot of that through the marketplace and drive a more premium position through their own DTC.

[[00:21:26]]
How would you describe The North Face’s D2C channel approach, and what specific optimisations would better position the company for near-term growth?

[[00:21:44]]
I believe from everything that I've been a part of and everything that I've heard that DTC is where they're going to put a ton of their, I'm going to call it resources, both people and cash. As DTC continues to show improvement for each of the regions, I think we're going to see some of those doors start to turn over. Some of their fleet is very aged, and so they need to make smart investments in the doors that matter. I think what we're going to see is a more compelling brand story come through in those DTC doors. At the same time, have a very sharp point of view on the accessible price points because you need that access to the brand for a consumer that is more price sensitive, but they are going to be showing up in a more aspirational way, both physically and digitally, which I think is really important to note.

The other thing is that there has been, over the last several years, a very important and intentional effort to better align physical and digital retail, which hadn't happened maybe five-plus years ago. They were really, I would say, managed quite differently. If they can start to drive more alignment with their entire DTC operation, I think the consumer is going to feel a more consistent experience and be more open to purchasing, whether it is shopping in the stores and seeing things, but then ultimately making their purchase online or vice versa.

[[00:23:30]]
What factors will determine wholesale channel success, and what specific needs must be met to drive growth for wholesalers currently facing challenges?

[[00:23:47]]
Number one is they want to see evolution in the product line. There are parts that have been getting really stale. If you think about the Summit line, they just relaunched in '25… No, in '26, this year, Summit is being relaunched. That will be great for the wholesale channel to have a fresh new Summit line. Some of the new introductions like a Red Box, which is definitely more lifestyle or streetwear, if you will, that's been great. What they haven't done is they haven't reinvented at the core for a while, and that core is just getting to be so price sensitive and it's such commodity business, so things like fleece and tees, we've seen even brands like Carhartt now have a huge fleece and tee presentation at Dick's Sporting Goods, bigger than what North Face has had in the past.

The wholesalers are asking for points of differentiation from the brands so that they don't have the same product as the retailer down the mall. I do believe what you're going to see is you're going to start to see more SMUs, more even early launches that are special like give JD something a month before everyone else, give Dick's something maybe a season before everyone else so that they are able to have a unique opportunity that separates them from other retailers. More and more, this is happening across especially the US marketplace, but we see it in the UK a lot as well, like JD doesn't want to buy what everybody else has. They want exclusives, so they're trying to spin colour on existing styles, you're going to see more and more of that, which is more work for The North Face, and it also means that they're going to be less efficient or less productive with each style in their line, but it's so important to growing that wholesale channel.

[[00:25:47]]
Could you unpack The North Face’s category mix? Which categories or products define the company’s positioning and need more focus across its entire assortment?

[[00:26:01]]
As I mentioned earlier, technical outerwear is numero uno. It is the reason for them to exist. Even their icons like the Nuptse or like the Denali, there's so many, these all started in the 70s and 80s and as technical pieces. Now they've just transitioned into more cultural-lifestyle pieces. That is the number one zone that they have to continue to invest in. Several years ago, Bracken shared this with the investment community, we stood up innovation teams, and we had very specific innovation teams in The North Face that were working on advanced innovation three, five, even more years out. That is super critical to maintaining their position as a credible outerwear brand. That's my answer, plain and simple. If they lose that, if Arc’teryx and these other brands start to take all that credibility away from them, that is really going to put them in this commodity space.

[[00:27:20]]
Assuming Arc’teryx takes away The North Face's credibility, would that represent a fundamental shift for The North Face, or merely a loss of its top end or technical outerwear while the vast majority of the assortment is repositioned?

[[00:27:42]]
If Arc’teryx continues to own those premium price points, I believe what you're going to see is that consumers start to question what's even happening in the middle, which is a huge amount of the business for The North Face. Depending on what Arc’teryx does with their line, if they start to introduce lower price points more accessible to the brand, then they're going to woo even further consumers away from The North Face. I guess, I would go back to things that I've already seen, which is and felt myself is definitely in the US, there is… I don't know how to say this the right way. There's a group of individuals that are trying to hit a number, so they're going to do anything to hit the number within The North Face and VF. The way to hit a number is to put more good and better level product out there. That really does hurt the top of the pyramid when you start pumping in more opening price point, middle of the market product. If they continue to do that and if they continue to invest more in those lower and middle levels and not the best level, that's just going to further erode their positioning with a consumer that is still looking at them as credible, but maybe is like, "You know what, I'm going to try something else because I see this mass market wearing The North Face." It doesn't feel so special anymore.

[[00:29:26]]
Is footwear a viable long-term growth strategy? How do you anticipate the segment’s growth relative to The North Face as a whole, given competitive pressures from brands such as Salomon?

[[00:29:40]]
Yes. I think I'd be pretty sceptical that it's like a primary growth driver for The North Face. It's such a small base, but that said, it's a very smart avenue for The North Face and for the VF portfolio. The North Face has been investing in trail running, so you've got Vectiv as a model. It's super credible. It's built on the trail. That's a super important model. Then when you look at what's happening with Amer and Anta, I know they've been growing, gosh, 20%, 25%, 30% with far stronger integrated approaches to their key looks and their footwear and apparel and even equipment executions. I think that's the thing that The North Face really needs to work on and a lot of that sits with merchandising and product leadership now. I guess, I'd probably say that The North Face's best path forward is to stay narrow in the more trail and the running and hiking area where it has real credibility rather than chasing a full head-to-toe footwear range, which is where they probably don't have the talent and there's an execution gap. If you look at today, how many things they've got online, they've got a lot of footwear. I'd just say they need to bet on fewer models, specifically in trail run, trail hike.

[[00:31:37]]
Where does The North Face succeed across the price spectrum – from value to premium – and which price points are most lacking? What is the brand's pricing power?

[[00:31:58]]
They have real pricing power still in their icons, so the Nuptses and those things, but they also have pricing power in a lot of their franchises and then also their outerwear. Technical shells, of course, and anything that's Summit because there's more scarcity, it's more seasonally driven. I guess, when I think about where they could grow their AUR, I'd probably say it's in more premium outerwear. If you think about things they've done like Casentino wool and Spectra, which is such an important innovation, or Cloud Down, consumers are willing to go with you on price because, especially, not only is the innovation there, but they're designing these and developing in these in such a way that they have a visual distinction to them. That's an area that they need to continue to focus on rather than creating more commodity products. I guess, the area of the least pricing power is things like we talked about cotton hoodies and tees, graphic tees. It is very, very hard to compete in these zones anymore. Things like backpacks, that is a very hard area to compete. Then even the kids line. Those are the areas that I'd say are probably the hardest.

[[00:33:34]]
Where are the greatest risks of AUR [average unit retail] erosion for The North Face, and how does the company’s outlet strategy factor in?

[[00:33:51]]
In the past, The North Face has been… Especially in the US, they've been highly promotional a lot of the year. I do see them slightly starting to step that back where there's key moments, but they're still heavily promotional. I think that's one thing to say. The greatest risk of AUR is going to be in that good and better level. Right now, the good has definitely held price or even been eroded already over the last five years. Tees and fleece have already been eroded. They're not getting paid for what they're offering the consumer. As a result, they've had to cost-engineer those products. Now the consumer is getting a lesser quality product, but other brands have done this, too, same with Nike. I've seen their fleece and tee quality go down because they're trying to hold price or maintain.

The bigger areas of risk now are in the middle tier, especially in filled outerwear, in shelves. When I say filled outerwear, I mean down and synthetic fills because the price of down is so volatile and has continued to go up, I think you're going to start to see more synthetic-filled outerwear at that middle level, but that's also a highly competitive space. Again, they're having to cost-engineer to maintain their margins. Retailers are asking for sharper price points or to continue to grandfather in, that word gets used a lot, grandfather in the price points year after year after year. That's where the biggest pressure is going to be, is on those existing franchises where they've had them for years and years, and they're driving huge volume, but the wholesale pressure is one in which they're trying to maintain their price.

[[00:35:55]]
Could you describe The North Face's approach to innovation? What do you see as the company’s greatest strengths and weaknesses in that regard?

[[00:36:11]]
Yes. There's a big shift that's just happened. I'll start with the strength, and then we'll go into the shift. The North Face has historically… They didn't have dedicated resources until about a handful of years ago. Then we had dedicated innovation resources and then real athlete-informed testing, the kind of testing and research and development that is going to give us an advantage in terms of fabric construction, not just like a marketing handle. The weakness now is that they are taking that innovation function and they've pivoted it into what I'll call and maybe unfairly, but it's more of a shared VF-wide pool because instead of reporting into the Head of Product, which the innovation team for The North Face used to report into the head of The North Face product, now, they are reporting into another individual who reports into the VF Chief Design Officer, Alastair. That leader comes from tech, so they don't have the apparel and footwear expertise. I think, combined with the loss of the experienced product leaders, there is real risk there. Innovation in outdoor gear is deeply relationship-driven, when you think about athlete feedback and materials, and it's deeply technical.

Now that they've changed this operating model where innovation is reporting through VF and not through the brand, I believe that is a huge risk for the brand. There's real signs that The North Face has now been pulled into this shared pool of VF, and that's a scary place for a brand to be. If I think about protecting brand-specific product innovations, you might not see that. In fact, there's been examples where there's been silhouettes, not necessarily innovation, but silhouettes that The North Face has owned like the Nuptse. Several years ago, Timberland used it and refabricated it. That was a huge no-no, we shouldn't be sharing that across brands. This move makes me feel like, "Ooh, we could be moving into this kind of Gap-era playbook where we're standardising processes and standardising platforms at the cost of really maybe distinctive product points of view that make the brand super special. It leads sometimes to cross-brand cannibalisation and less specialisation. That's a really dangerous place because even Vans has increasingly borrowed directly from The North Face's outerwear silhouettes and colour stories rather than each brand staying in its own lane, which further dilutes The North Face's technical outerwear look rather than reinforcing it.

[[00:39:47]]
Is there anything else you'd like to highlight about The North Face?

[[00:40:08]]
The only thing to touch on is that The North Face's approach has been to lean in on icon re-isuses and updates and to layer in these premium capsules like we talked about with Summit and Red Box. They do have a risk that we didn't really talk about, which is relying so heavily on the nostalgia and the strength of the icons that the brand underinvests genuinely in new technical innovation because they've got so much revenue tied up in these icons. That's just one area of risk, and it is happening right now because some of those icons are such huge businesses that they drive more revenue than some of these new innovation spaces, so the risk is to just keep pumping more into those.

[[00:41:01]]
Does this imply innovation resources are funnelled into refreshing icons rather than pursuing technical innovations or new styles and products?

[[00:41:18]]
The innovation resources have now been moved. The innovation teams report into VF. The design resources that are doing the icons and the franchise updates, they live within the brand still. There's a separate team working on colour, silhouette, material for those icons than what is the true technical innovation teams. That's further a little bit scary when you think about the teams are now separated in terms of reporting structures.

[[00:41:51]]
How would you rate VF's turnaround of the Vans brand? Considering the sales decline deceleration guided for FY26, do you think it has reached a trough?

[[00:42:08]]
I have to say I'm really impressed that Sun has really streamlined and she's made meaningful progress on the operational discipline of Vans. I'd say, though, there's less clarity on the recovery with consumers. It's great that they closed, I think, close to 150 doors to improve their profitability. That's a real credible fix that she made, but they still haven't returned to growth. I don't know that I'd say that they've bottomed, but I don't think we can say that they are winning yet unless they have two or three consecutive quarters of positive comps, which they haven't seen.

[[00:42:59]]
How is Vans's customer identity evolving? Do you agree with management's claimed shift from skateboarding to more of a California lifestyle? Do you see that as valid or ideal?

[[00:43:15]]
I think it's interesting because Vans, for so long, was obviously, we know it was a skateboarding brand. Sun has really been repositioning their consumer to more California lifestyle. I think that's probably her… It's not really strategy. It's more like a marketing reframing, which is smart. That's one point. I think Sun also said that their core issue wasn't really their brand awareness, but maybe that the consumers pigeonholed them into a very sharp and narrow read of the brand through skateboarding. I really like and I believe she's right to broaden that to this more California lifestyle without abandoning their roots, so I give her a lot of praise for that.

[[00:44:19]]
Is there anything else you would recommend to aid Vans and its ongoing turnaround?

[[00:44:24]]
I guess, she's doing the right things with the collaborations that she's been doing. I think those are definitely reaching a new consumer. I think reaching out to other lifestyle, fashion consumers through further collaborations is great, but the risk is going to be diluting their authenticity when they continue to do this because now they're competing with Converse and Adidas Originals and so many other lifestyle sneaker brands. They really need to continue to maintain their credibility.

[[00:45:12]]
How would you assess the health of the VF portfolio? What are its greatest strengths and weaknesses, and what potential changes would you like to see?

[[00:45:25]]
The strengths are clearly TNF and Timberland, internally and maybe externally, too, people call The North Face the crown jewel. It's still growing. I still believe that's a key strength. Timberland also, which has had this amazing renaissance, this great resurgence, that's been amazing to watch. Then also the small but mighty Altra, they have tremendous leadership that they have brought in, in the last 2.5-3 years. Kylee Barton is absolutely a phenomenal footwear leader with a background from Nike. I mean, what she is doing with Altra is really impressive. I think Vans is the weakest link. The change I'd want to see is probably less centralisation of product innovation talent under this generalist, non-apparel, non-footwear executive and more brand-specific autonomy for the product creation teams because the current structure is really risking making every brand under the VF portfolio come together with the same look and voice, and it just undercuts the differentiation that each brand needs to compete against their own competitor market set.

[[00:46:59]]
Beyond cost savings, what are the strategic benefits of centralisation? Are there benefits that can be realised from a centralised, shared services structure?

[[00:47:18]]
Yes. There's certainly going to be cost savings, like you mentioned, in pulling those resources together. There's also going to be benefits because so, oftentimes, and I've seen this at many brands, when you are creating something where you believe it's going to have a specific application, but the result turns out slightly different, those teams can now pivot it from brand to brand or from one classification to another, depending on how the execution works. An example would be if they're working on an advanced footwear innovation and they've got something that they're working on for, let's say, Altra or The North Face, and it doesn't quite pan out, maybe they use it for Vans because it could be more of a lifestyle application. The same can be true of apparel. That's a real benefit of pulling those resources together.

[[00:48:10]]
Do you see that benefit as outweighing the cannibalisation risks you mentioned earlier?

[[00:48:16]]
No. It's more than the cannibalisation. It's more that now you've got a team that is somewhat segregated from their own brand partners, they're not sitting at the same tables all the time. They're not in the same rooms. The way in which product is made, yes, there's structure and process and strategy, but so much of innovation happens spontaneously and organically. Those conversations are the ones that it gets worrying that the teams aren't in the same rooms when that magic happens.

[[00:49:02]]
You mentioned Altra is a small but mighty brand. What do you think has limited its growth?

[[00:49:22]]
It's a footwear-only brand, so that's a ding against them, unfortunately. Whereas you've got Arc’teryx and Hoka and Salomon. Even though Salomon and Hoka are definitely footwear-first brands, but they've got apparel. Arc’teryx is an apparel-first brand, obviously, with footwear. That's a ding to them, but I think the other thing is that they are so small. Within the VF portfolio, a lot of the resources and the marketing has been funnelled towards Timberland, towards The North Face because of their success and to Vans because they need them to turn around. They just haven't been getting the marketing spend that they really deserve.

[[00:50:05]]
Aside from the Dickies divestment, what factors do you think have led to VF achieving its FY28 55% gross margin goal, and what levers were most impactful in reaching that goal in Q1 2026?

[[00:50:38]]
Definitely cost discipline because they hit their cost savings target by the end of '25. That's been a key part, and cost discipline from VF and all the brands. There's a huge amount of discipline in terms of spend, travel, you name it. I think the second is that there's this shift away slightly from wholesale into DTC, so that also is giving them wins on the gross margin side with more premium products that are going into DTC rather than commodity products going into wholesale and all of a sudden they're getting the double margin.

[[00:51:27]]
Is there potential for further structural gross margin expansion? If so, where?

[[00:51:36]]
Yes. I mean, definitely through more premium product introductions like we've talked about that are technically distinct, have a higher average selling price or MSRP. That will definitely be one way. I think second is to continue to drive their DTC penetration. Then third is if they can really get a meaningful handle on reducing their promo cadence, both for their own DTC as well as in wholesale, that is going to be significant. They're working right now on culling out some of their distribution. If that happens, they can really start to manage the marketplace in a more significant way.

[[00:52:26]]
How attainable is the 10% operating margin goal by FY28, and what are the key supporting factors and potential headwinds?

[[00:52:38]]
I personally think it's tough. I mean, Vans has to grow. That's the thing that's going to make this or break this. Then you've got broad consumer softness in their discretionary spending. That's going to pressure a couple of things. Number one, it's going to pressure both the volume that you're going to get, and it's also going to pressure the ability to raise the MSRP. I think about that a lot, not just for these brands, but for others. Then I think an execution risk from leadership in that innovation space can also slow that need for them to be more premium and hurt a lot of their margin opportunity.

[[00:53:42]]
What are the best vs the most likely uses for potential IEEPA tariff refunds?

[[00:53:57]]
The thing that, as probably a merchant, I'm going to be biased here, but I think, number one, they have to reinvest into physical stores. The North Face and Timberland's DTC physical store build-outs have to get an investment. There are some that are extremely dated. I think Vans is already on this path. Then maybe I'd go to the second, which is, probably again, biased because I'm a merchant, but it's some kind of pass-on margin with price relief in these more value-sensitive parts of the portfolio, the opening price point of apparel, and with Vans to support their recovery, I think they need a little bit of price relief there. Those would probably be the two that would come top of mind.

[[00:54:59]]
Do you have anything else you'd like to highlight about VF or The North Face?

[[00:55:09]]
Gosh, I mean, we've covered a lot. I don't know that there's anything else to add.

[[00:55:19]]
In that case, I will end this Interview by saying thank you very much for your time and for the insights that you've shared with us today. I do hope you have a great rest of your week ahead of you.

[[00:55:28]]
You, as well. Take care.

Transcription ends at 00:55:30 of the recorded material