Please stand by. Good day, welcome to the V.F. Corporation conference call. Today's conference is being recorded, at this time, I'd like to turn it over to Joe Alkire, VP of Investor Relations. Please go ahead.
Good morning, everyone. Thank you for joining us, welcome to V.F. Corporation's conference call to discuss the announcement of our agreement to acquire the Williamson-Dickie Manufacturing Company. Participants on today's call will make forward-looking statements. These statements are based on current expectations and are subject to uncertainties that could cause actual results to differ materially. These uncertainties are detailed in documents filed regularly with the SEC. I would also like to highlight that in addition to this morning's release, we have posted a presentation to the investor relations section of our website and will be referring to this presentation during the call. Joining me on today's call will be V.F.'s President and Chief Executive Officer, Steve Rendle, V.F.'s Chief Financial Officer, Scott Roe, and the Chief Executive Officer of Williamson-Dickie, Philip Williamson. Following our prepared remarks, Steve and Scott will be available for a question and answer session. Steve?
Thank you, Joe, good morning, everyone. Thank you for joining us for today's call, which is taking place from Fort Worth, Texas. We're thrilled to be with you today to announce the acquisition of Williamson-Dickie Manufacturing Company, an acquisition that marks another milestone in V.F.'s storied history, an acquisition that we believe is the next catalyst for another layer of transformative growth and value creation for V.F. and our shareholders. Earlier this year, when we introduced our 2021 strategy in Boston, reshaping our portfolio to accelerate growth was our number 1 priority. We also declared workwear as a new strategic growth platform. Our announcement this morning that we have reached a definitive merger agreement to acquire Williamson-Dickie delivers on both of those commitments in a significant way represents another step on our journey to accelerated growth and value creation.
I want to emphasize journey, because we're not finished. We remain committed to ongoing and active portfolio management, we will continue to make transformational moves and evolve V.F. as we have done many times throughout our history. We will position our company for sustainable long-term growth and success. We're a value creation company. As we developed our 2021 strategy and looked for ways to accelerate growth in our workwear platform, the highly fragmented nature of the $30 billion global workwear market offered several unique acquisition opportunities. Williamson-Dickie is one of the largest companies in the work sector. It has a diverse global portfolio of iconic brands steeped in a deep heritage and authenticity. Williamson-Dickie has been in the business serving a loyal consumer for nearly 100 years and is built on a bedrock of family and business values that connect deeply to the way V.F. operates as an enterprise.
For these reasons, and many others, Williamson-Dickie quickly rose to the top of our list as the most preferred addition to our strong and growing workwear portfolio. Today, we're taking a meaningful step forward in fulfilling that vision. I'm very excited about our acquisition of Williamson-Dickie and the opportunity to accelerate growth and value creation through its portfolio of diverse global brands. The strategic rationale for this combination is clear and compelling, as this transaction brings together a stable of strong, complementary assets and capabilities. Building on our solid foundation in workwear, the acquisition of Williamson-Dickie creates a $1.7 billion workwear powerhouse that will now serve an even broader set of consumers and industries around the world. The underlying end markets we'll serve are large, diversified, and growing, and the macro forces we see forming should provide a consistent tailwind for accelerated growth during the next few years.
I see tremendous opportunity to accelerate market-changing ideas and leverage the strengths and capabilities of both companies, including product innovation, manufacturing and supply chain excellence, D2C and digital, and international. The economics of the transaction are very attractive, and it is immediately accretive to EPS and free cash flow. Importantly, our acquisition plan includes a path to significant near and long-term value creation. As we highlighted in the presentation, over time, we see an opportunity to drive even more value creation beyond what is currently assumed in the targets provided today. The synergies across our strong companies are truly significant. As many of you are aware, Williamson-Dickie is V.F.'s first acquisition since we acquired Timberland in 2011. Acquisitions remain our top capital allocation priority and over time have provided our shareholders a tremendous amount of value creation.
That said, we have a goal of top quartile total shareholder return, and we have a strong organic growth plan, so the bar is high. We shared with you the strategic and financial filters we use to evaluate not only our existing portfolio, but also our acquisition opportunities. While acquisitions are incredibly hard to predict, our patience and thoughtful and disciplined approach to capital allocation is typically rewarded with unique and compelling acquisition opportunities. We believe the acquisition of Williamson-Dickie is one such opportunity. Before Scott covers the financial implications of the transaction, I'd like to turn the call over to the CEO of Williamson-Dickie, Philip Williamson, to say a few words. Upon closing the transaction, Philip will continue to lead the company headquartered in Fort Worth. Philip?
Thanks, Steve. First, I'd like to say how excited I am about today's announcement and give you some perspective on why this day means so much to me. My family founded Williamson-Dickie in 1922. Back then, we were selling denim bib overalls to Texas ranch hands. In five to 10 years, we rapidly expanded to include men's, women's, and kids' apparel, and our sales territory covered the entire Southwest. Within 20 years, our business was nearly nationwide. In the 1950s, we expanded our brands internationally, specifically selling workwear to oil field workers in the Middle East and in the North Sea. In the 1980s and '90s, our Dickies brand was adopted by pop culture. Today we are proudly standing strong with a solid presence in more than 100 countries. It's been an awesome journey for us, one that we are extremely proud of.
Our strong group of workwear brands includes Dickies, Walls, Workrite, Terra, and Kodiak. The emphasis we've placed on growing our share of the global workwear market is the reason why we're on this call today. Over the years, many companies have come knocking on our door expressing interest in acquiring Williamson-Dickie and our portfolio of brands. None of those companies were the right fit for us for many reasons. V.F. has proven themselves to be a different story. There are many similarities between our two companies. Like V.F., our heritage is in manufacturing. Our two companies fit together naturally because they embrace and represent the same values, standards, and commitment to quality. We believe that by combining our brands into V.F.'s portfolio and leveraging each other's strengths will unlock many exciting opportunities in months and years ahead.
The first 95 years of business have been very good to Williamson-Dickie. I know that my family and I are proud to partner with V.F. to make the next 95 even better. I'll turn it over to Scott.
Thank you, Philip. We could not be more excited about the Williamson-Dickie transaction and the opportunity to drive accelerated growth and value creation through our expanded workwear platform. We have strong conviction that the union of our two great companies is in the best long-term interest of all stakeholders. V.F. is a consumer-focused enterprise with a deep commitment to total shareholder return. We focus on value creation. It remains at the center of everything we do. Our goal is to deliver consistent, sustainable top quartile TSR. I'm confident that the Williamson-Dickie acquisition will be accretive to the already strong organic growth plan we communicated at our investor day. We're not finished. We are committed to active and ongoing portfolio management, stay tuned.
As you saw in the news release this morning, under the terms of the merger agreement, we have agreed to acquire Williamson-Dickie for approximately $820 million, subject to customary closing conditions and regulatory approvals. This will be an all-cash transaction using V.F.'s excess cash and commercial paper to fund the acquisition. We currently expect an early fourth quarter closing date. Our balance sheet will remain strong. We do not anticipate an impact to our investment-grade credit rating as a result of this transaction. M&A remains our top capital allocation priority. We have the capacity to continue to pursue additional acquisitions. For reference, we've posted a short presentation on our website that outlines the specifics of this transaction in more detail. Let me provide some additional context regarding the financial implications of the deal. Williamson-Dickie generated approximately $875 million of revenue on a trailing 12-month basis.
Like what we've experienced in our own workwear business, the Dickies brand has seen accelerated growth over the past several months as momentum in the industrial sector continues to build. This business is nicely diversified across geographies, channels of distribution, and product categories, and it's very complementary to our existing workwear portfolio. More specifically, this transaction gives us access to large and growing value pools in the healthcare and services sectors, and we see measurable synergies as we integrate the Williamson-Dickie brands into our international and D2C platforms. Assuming an early fourth quarter closing, we believe the acquisition will contribute approximately $200 million of revenue in 2017. As we look out to 2021, we see the potential for Williamson-Dickie to contribute more than $1 billion of revenue, which when combined with our organic growth, puts V.F. revenue north of $15 billion by 2021.
Said differently, relative to the mid-single-digit growth compounded annual growth rate we provided during our investor day, we now expect V.F. revenue to increase at a 5%-7% rate through 2021. From a profitability standpoint, Williamson-Dickie has both gross and operating margins that are below those of V.F.'s workwear business today. The company's operating margin is currently around 7%. Now, I'll remind everyone that V.F.'s most successful acquisitions to date, The North Face, Vans, and Timberland, all had operating margins below 10% at the time of acquisition. Compare that to today, where these three brands have a combined operating margin in the high teens. There is a blueprint, and our proven operating model will add tremendous value. We have a long track record of successfully integrating acquisitions. It follows that we intend to significantly improve both gross and operating margins over time.
In light of the synergies we see, our acquisition plan assumes that we double the company's operating margin to 14% by 2021. As we look across our businesses and the workwear sector at large, there is simply no inherent reason that would prevent Williamson-Dickie profitability from increasing to the level of our current workwear portfolio as we integrate these brands into our global platforms. As Steve mentioned, the economics of this transaction are very attractive, and it is immediately accretive to EPS. Excluding transaction and other deal-related expenses, we expect the acquisition to contribute roughly $0.02 of EPS in 2017. We see more than $0.25 of accretion as we look out to 2021, which when combined with VF's organic growth plan, provides VF with over $5 of earnings by 2021. That translates into a strong low to mid-teen EPS compounded annual growth rate through 2021.
When coupled with our dividend yield, would provide our shareholders with a mid to high teen total shareholder return. Finally, just a few comments regarding our 2017 outlook. Given this transaction, our updated outlook is as follows. We now expect revenue to be $11.85 billion versus the $11.65 billion we provided during our second quarter earnings call. We now expect gross margin to reach 49.5% and an operating margin of about 13.7%. This compares to the prior outlook of 49.8% and approximately 14%, respectively. Our outlook for earnings per share is now $2.96 versus our prior outlook of $2.94, which again excludes all transaction and deal related expenses. Now back to Steve to close.
Thanks, Scott. Thank you for your time and interest in our great company this morning. I'd like to close by extending a special thank you to the V.F. and Williamson-Dickie teams and our advisors for their hard work, commitment, and dedication to this transaction over the past several months. Talent is a foundational element of V.F.'s 2021 strategy, our continued success, and our culture. Our people are our most valuable asset, and I'm extremely grateful for the continued commitment and contribution of all of our employees around the globe. Scott and I are now happy to take any and all your questions.
If you'd like to ask a question at this time, please press *1 on your touch tone phone and please make sure your mute function is turned off to allow your signal to reach our equipment. Again, that's *1 for questions. We'll take our first from Michael Binetti, UBS.
Hey, guys. Good morning. Congrats on the transaction. Thanks for taking my question. As I think about the business, could you help us think about, obviously, the million-plus workwear business is no small business. Can you help us think about what some of the long-term revenue opportunities are? Then maybe, Scott, you could help us to think about. I know we're using rough numbers here, but the revenue CAGR for the Williamson-Dickie business is a little bit below your current business CAGR. If we just look at the $1 billion by 2020, does that mean there's a step back in the revenues up front, something similar to what you've seen in past acquisitions? It doesn't seem to reconcile using simple math on the CAGR of that business versus what it adds to the V.F. CAGR, taking it from 4% to 6% to 5% to 7%.
Yeah. Maybe I'll start with the second question. You're right, Michael. It is a little bit below our workwear CAGR, and you're also right in the reason why. Listen, there's a lot of synergies in this business. If you saw the document that's out on the website, you can see that there's many areas where the Williamson-Dickie brands play that V.F. doesn't, and that's a lot of where that growth is going to be coming from. It's a really nice counterbalance to us. On the other hand, there are a few areas where we are together, and we're assuming that there will be some consolidation or step back as we solidify the base for growth. There's no reason why this business won't grow at the rate of our existing businesses over time. Frankly, we don't know all the details yet.
We're just starting to get and engage. We've made an assumption, as we've given you forward guidance, that there will be some sort of a step back before we embark on the growth plan. The main point is there's no reason this business won't grow at the rate of our existing businesses over time.
Michael, I would just add real quick. Where do we see the growth? I mean, clearly, in the traditional sectors that we've participated in over the years, Williamson-Dickie brings an expertise and access to the healthcare and services sector, an area where we have not played in a great degree. We think together we can see distorted growth. Also, it'll be a really balanced approach against our B2B capability and our B2C strength that both businesses have, and how we would leverage VF's skill and expertise in B2C and in the international aspect that Williamson-Dickie has a slightly stronger penetration in. There's a lifestyle element to this portfolio that's different than ours.
To Philip's comment, Dickies has accessed a lifestyle element in the '90s, we continue to see it today, that we think bringing our brand building capabilities and access to our other large brands, that we can bring a strong capability that sits in the Williamson-Dickie business in Asia, we'll be able to grow that both in Europe and here in North America.
Can I just ask one follow-up? It sounds like I kind of understand the rough shape of how the revenues of the business should look over the next few years. If we think back to Timberland, you guys were able to impact profitability more quickly since you mentioned that earlier from the starting point of a 7% margin. With Timberland, you were able to do things like put them on your international tax structure early, re-platform, I think some of the manufacturing, and you were able to pull the profitability levers more quickly than the revenues. Just to give yourself and your shareholders some earnings cover while you went through pulling back on some of those revenue areas. Is this a similar situation? Do you feel like you can move the profitability off that 7% level faster by moving this business over to some of the VFC platforms?
Yeah, absolutely, Michael. You really hit the big drivers, right? From a tax platform and just scale too. If you look, margins in this business are in the low 30s%, gross margins, I'm talking about, in the low 30s% compared to ours, which would be in the high 30s%. You think about efficiency, scale, our Asia platform, our Panama platform, the fact that we're both manufacturers and the scale that comes with putting that together and the throughput. We see a lot of opportunities that will be fairly near in as we look forward. Now, it's not immediate, but it will be in the early part of that. As you're thinking of the 2021 timeframe, it'll certainly be in the first couple of years.
Okay. Thanks a lot, guys, and congrats again.
Thank you.
Thanks, Michael.
Our next question comes from Lindsay Drucker Mann with Goldman Sachs.
Thanks. Good morning. I was hoping you could maybe frame as a starting point, for Williamson-Dickie, how much of the business is true workwear versus the stuff that might go more traditional, casual and fashion apparel category.
Yeah. This is not exactly your question, but first of all, of the Williamson-Dickie total revenue, little more than three quarters of that is the Dickies brand itself. In terms of the breakdown, about 90% or so would be in the, what we would say, workwear, with the remainder being the lifestyle. Interestingly, over time, we see, as Steve mentioned, lifestyle, we think, could be one of the faster-growing categories, especially when you think about some of the synergies in our other, not just our workwear portfolio, but in our branded portfolio. There's some adjacencies that we see as a real opportunity.
Great. As a follow-up to Michael's question, just on the gross margin side, are there any you talked about it just a little bit, I was just hoping you'd go a little bit deeper. What are the reasons or are there any structural differences, or key operational differences that drive the delta in gross margin? Scott, just to follow up on a comment you made in your prepared remarks, a "Stay tuned, this isn't our last transaction." Does that suggest that you feel like the pipeline and the opportunity is a little more robust today than it had been?
Yeah. As it relates to gross margin, I don't know if I'll satisfy your question, Lindsay, but we're looking across our manufacturing platform. We've had the chance now to compare, and see what the cost structure of the Williamson-Dickie company looks like. We've added the benefit of more volume, and throughput through our collective plants. Again, the leverage point of, we have a well-developed sourcing structure in our Asia, Hong Kong platform, as well as in Panama. That, coupled with the tax benefit, those are gonna be significant and relatively close in benefits. The other things that we'll be looking at, the mix is a little different of the business.
One of the primary things that we're looking at, as we can now engage directly with the teams, is what are those joint opportunities where together we can be more powerful, bring a better offering to the consumer and unlock opportunities that maybe one or the other companies couldn't access because of their capabilities and/or reach of brand. We see opportunities to grow margin through mix by accessing some of those opportunities as well. Maybe I'll throw it to Steve, back on the M&A front.
Yeah, Lindsay. VF's commitment to M&A has been strong and continues to be strong. I think what you're hearing from Scott and I, coming out of Boston, with reshaping our portfolio, really being that number 1 choice in our new integrated strategy, is just bringing some new points of view, but also really tapping into our consumer database and understanding what our consumers are doing, where do we see them pivoting in their daily activities, and how can that help inform us as we continue to look to shape our portfolio. Really looking for those unique elements that we would have capabilities to be able to really come in and service them in a high degree. Really, the commitment stays strong.
I think what the difference here is just as we really tap into our growing consumer database and using the analytic tools that we have, helping us see where those new growth vectors will sit.
Lindsay, just to add on that, maybe part of your question was relative to the environment itself. I think in the last earnings call, we talked about the fact that one of the advantages of the fact that our sector has fallen a bit out of favor in general is that, it does create some valuation opportunities, as investors are, in some cases, we think, too pessimistic about the prospects. The fact that in general our valuations have come down on a relative basis, coupled with the fact that we have a very strong balance sheet and have a lot of dry powder. As I think I said in the second quarter, we see things coming our way a bit, and we like our position from an M&A standpoint right now.
Great. Thank you.
We'll go next to Laurent Vasilescu, Macquarie.
Good morning, thank you very much for taking my question. Can you talk about how the top line performed over the last few years as a standalone company? I want to ask about the future growth in terms of the mid-single-digit CAGR. Is there a particular region which will support the growth going forward? Where do you think DTC will go as a % of revenues by 2021?
I guess a general comment, first of all, is that the Williams Sonoma business is privately held, so a lot of the information has not been disclosed. Actually, none of the information's been disclosed. I think it's fair to say that they've seen a similar trajectory of what our work business has over the last couple of years. Likewise, they're seeing the kind of recovery in that business and the oil and gas has stabilized. The industrial sector is continuing to build. I think that was even in the prepared remarks that we're seeing a similar trajectory from their business than ours. That's a general statement. It's also important to remember that they are not the same in terms of distribution channels and where they operate. Much more D2C oriented, much more international.
In fact, D2C and international combined are more than half of the revenues of Williams Sonoma. That's significantly different than V.F., which is less than 10% for those two factors. That's one of the things that excites us about this opportunity, is that those synergies and the fact that they're strong where we're not as strong and vice versa, we see a lot of synergy there. I forgot the second part of your question, Laurent.
Sure. I was asking about the DTC mix going forward by 2021.
Laurent, it's about 14%, 15% today of Williams Sonoma total business. We see that continuing to grow really consistent with how we're looking at our larger V.F. trajectory. Strong digital capability sitting with their businesses. We see the opportunity to really combine our two portfolios and bring to market a truly segmented head-to-toe offer that provides the products and the experiences to this workwear consumer. Don't forget the lifestyle piece. We see a really interesting opportunity to what Williams Sonoma has been able to do in their international business, how we can bring our two companies together, tap our expertise in brand building, and grow that here in the North American marketplace.
Okay. Very helpful. As a second follow-up question, I think when you acquired Timberland, you also acquired some manufacturing capabilities in the Dominican Republic. Are there any hard assets we should be aware of? Are there any supply chain competitive advantage we should be aware of that can actually be complementary to the existing portfolio of brands?
Yeah, absolutely. As I think I said earlier, Laurent, this company has very strong and they're very capable as manufacturing. There are plants in Mexico, Honduras, which would be very complementary to our existing plants that we have as well. Culturally, and just the way they run their facilities is also very similar. We see a lot of leverage in putting those two together. One of the things in your own plants that is a differentiator from a profitability standpoint is full utilization. Obviously, as you get a bigger population of demand and you put a bigger network together, the opportunity to keep those plants humming at full capacity, that's an unlock here. That's one of the value drivers here.
Thank you, and best of luck.
Thanks, Laurent.
We'll go next to Bob Drbul, Guggenheim.
Hi, guys. Good morning. Congratulations.
Thanks, Bob.
Two questions. I think the first one is, when you look at the Workwear coalition, does this acquisition force you to do more integration than you had previously done as you were running your Workwear coalition? The second question that I have is in the wholesale business, what are the largest wholesale retail partners that Dickies distributes through?
Great. On the Workwear coalition, I'm not sure exactly what you mean by force us to do more integration. I think what we see, Bob.
Yeah
It is an opportunity to really now look at a portfolio of brands. With Timberland PRO, Wrangler RIGGS, Dickies, Red Kap, Workrite, Bulwark. We now have a stable of brands that have a very particular point of view and bring very particular capabilities of product to their consumers. To now put together a fully integrated portfolio, look at the market through a lens of segmentation, and together really driving innovative products into these different sectors and servicing our consumers. How we begin to integrate these two businesses is really unlocking the strength of that portfolio.
From a workwear business standpoint, concentration of customers from a wholesale standpoint is very similar to ours, strong B2B component and on the B2C piece. They have a strong partnership with Walmart, just as we do.
Okay.
We see opportunities to really utilize both of our relationships to continue to strengthen that. I think I would really emphasize the strength of the D2C business here at Williamson-Dickie, the digital aspect of that, and the strong international business where we see great growth.
Okay. The other question is, when you acquired Timberland, one of the biggest and easiest cost-saving initiatives was the fleet of planes. Is there a similar fleet of planes that are operated in the Williamson-Dickie business?
A fleet might be an exaggeration, there is a very small operation here in Fort Worth that we're working with the company to determine what the best outcome is.
Great. Good luck with that.
Yeah, it's not.
Thank you, guys.
Next question comes from Erinn Murphy, Piper Jaffray.
Great. Thanks. Good morning. I guess a couple of questions. Could you maybe first talk about the bidding process? How competitive was it? Then secondly, just wanted to go back to the cyclicality of the business. You said it's followed the shape of your workwear business in the last few years. Now that we're in sub-$50 crude, can you just speak a little bit more about kind of the opportunity as we stay in this type of range from an oil price perspective? How confident are you that you can get back to that $1 billion? Thanks.
First of all, Erinn, I'll take the first part. I think you can appreciate, as a private company that Williamson-Dickie is, and we're really not going to comment on the process. That's not appropriate, especially for a private company. I would say, though, that as Steve and I have both said over time, we build our business based on relationships. Really, the reason that this deal, and any deal that we do comes to fruition is a longstanding relationship and mutual respect that has developed over time.
Just like many other deals, Timberland being an example, we've known this family and the principals for a number of years through various people, and we've continued that dialogue, and we've come to a point where everything came together, both from their desires, from the economics, and it's just the right time for both of us to do this transaction. That's really all we can say regarding that.
Erinn-
Got it. One more second
Could you repeat the second half of your question? I'm sorry, I didn't catch it all.
I'm just trying to understand a little bit more about the cyclicality. I think you answered to a previous question that it's followed a similar shape of your own workwear business, just given where oil prices have gone. If we stay in a sub-$50 crude world, how comfortable are you with the re-accelerating revenue? Just trying to understand some of the puts and takes of the cyclicality of the business.
Sure. The cyclicality is similar to what our workwear business has seen over the years. I would just remind you, our workwear business has delivered very consistent, balanced performance over a long period of time, both revenue and top line. What we see here is really the spread, and you can see it in our presentation of the different sectors that we are in today, but also that Williamson-Dickie covers. I mentioned the services sector as well as healthcare, two new sectors for us to be looking at, and how might we together strengthen our penetration there.
I think the diverse set of sectors that this business taps into, but also the lifestyle piece and our ability to look at that international aspect and tap into D2C to really come to the consumer in a different way, we think is the mitigating component in this new portfolio approach.
Erinn, listen, FR is a great business for both of our companies, fire retardant, flame retardant workwear, and obviously, that has an oil and gas application. Remember, it's broader than that, first of all. It's also other industries, the electrical utilities and others are participating there. When we look at the evolution of these plans on a collective basis, the FR as a percentage of the total is relatively small in the overall scheme. Really important business. We're really good at it. We make a lot of money at it. It will continue to grow. As a percentage of the total, we see even larger growth pools in the areas that Steve mentioned, services, medical, and international, and lifestyle.
Yeah.
Got it.
I'd add, Erinn, that the FR products have the same value to wind and solar energy applications as well. There's new growth pools available to those businesses today.
Thank you, guys. All the best.
Thanks, Erinn.
We'll go next to Dana Telsey, Advisory Group .
Good morning, everyone. Congratulations. As you think about this acquisition and think about the Timberland acquisition, which was the last one, what's the differences between this one and that one? What do you think the timeframe of meeting some of the certain hurdle rates, what could be different about this than from that? Just lastly, demographics and how you think of the demographics of this business. Is it expanding the workwear category for you? Is it getting new customers that you didn't have before? Thank you.
Yeah, maybe on the numbers side first, I'll hit that. If you think about Timberland, I think our time to value will be a bit sooner in this acquisition relative to that acquisition, as we look at some, particularly around gross margin levers. The tax benefit should be similar to what we saw in Timberland. Also, while we did say there's an expectation of some consolidation or setback, some cannibalization in the early days, probably not to the extent that we saw in Timberland. That's our assumption based on what we know today. From a revenue standpoint, we had a pretty large reset from the Timberland. While there will likely be some of that, we don't think it'll be the same magnitude.
Right.
To answer the question on the similarities and differences, I think when you think back on the Timberland acquisition, we were purchasing a brand that had a very strong international business. It was really distributed through the traditional retail channels that the rest of our portfolio is distributed through. If you think here in the U.S., it really is in the heart of those core traditional distribution channels. The differences here is Williamson-Dickie sits in an adjacent set of distribution channels that are really not under some of the stress that we see in the day-to-day businesses that we all talk about. In Boston, we talked about how we looked at our distribution matrix, where we, more from an hourglass visual, on the premium aspect and then on the value aspect.
We think this portfolio of brands will be able to really operate really nicely in that view of the distribution matrix. Really attack or approach a consumer that sits adjacent to the traditional and really dealing with them in their day-to-day usage occasions, specifically around work, but also the power of the Dickies brand, really be able to distort that from a lifestyle standpoint. The demographics here, this is a core work consumer that we know really well. We've talked about how we have a lot of crossover between our different brands. We see that today already with our Wrangler RIGGS, Timberland PRO consumer. There's also an overlap here with our Vans consumer in that lifestyle aspect, that we'll be really able to tap into our demographics information and utilize that to help, not just grow the Williamson-Dickie business, but also our core portfolio.
An interesting, I think, I'd leave you with is the Dickies brand awareness is greater than 90% here in its core North America marketplace. That is exceptional and really only rivals one of our other brands in our portfolio. It brings a really, really powerful brand that we think we can get behind and continue to leverage and grow beyond just its traditional work environment.
Thank you.
Thank you.
We'll go next to Sam Poser, Susquehanna.
Hey, Sam.
Good morning. I guess, one of the things is they have, I think it said there's 4,000 employees. When you think about this is a tough thing to talk about before the deal's done or signed. Once it's done, how do you foresee sort of the synergies like from, what they can offer you maybe to help your work business and on the back end, what you can offer them sort of more on a as you see it, because clearly, they must have a pretty good group of people working there. You generally won't touch it unless they do. I guess, how do you see all that sort of melding together back of the house and sort of stuff they might be able to do to help you with your existing work business?
Yeah, Sam, this is Steve. It's really early for us to comment on that specifically. As we've gotten to know the Williamson-Dickie business over the last few months, certainly we've been able to look at all aspects of their company. We're just now beginning to put together that integration team that will prepare us between now and closing on what those synergies will be. Are there going to be opportunities? Absolutely. To get the gross margin accretion that we talked about, we see that across all aspects of the business. It's really early to say on either side of the equation where those impacts and opportunities will ultimately land.
Thank you. Also, you talk, that sort of slower growth rate. You must see something because you're expecting, I guess, the growth rate to accelerate a bit towards the next couple of years. Do you see anything it immediately might give you to some of the existing businesses? I'll ask it a different way. To your existing businesses. From a distribution perspective or something like that, as you've probably met with some, I would assume you've probably met with some retailers or some of their customers as well to find out, in doing your due diligence.
Right. If you go back to Boston Sam, when Kurt kind of laid out how we looked at our current business through the lens of B2B, and then on the B2C standpoint. We talked about growing on a mid-single-digit rate over the next five years. We think looking at both aspects of where these consumers are, is what gives us confidence in the mid-single-digit growth that we talked about there. What's interesting as we bring in Williamson-Dickie to the portfolio is the ability to distort that D2C component, specifically digital. Is there a brick and mortar opportunity? Not sure. Certainly, something we'll look at, with the strength that we have with our three largest brands. Also, from an international standpoint, we're accessing new growth pools that we have not been able to do to a great degree ourselves in the past.
It's really looking at this truly segmented offer, with a portfolio of brands that we'll be able to talk about and bringing a fully segmented head-to-toe approach into that B2B and B2C distribution matrix. Together as one V.F. approach, that's a very different model than we operate with today. We think that is one of the reasons we see this as a very interesting opportunity and think that V.F. has a really high degree of value to this work consumer.
Thank you very much and much success with it.
Thank you, Sam.
We'll take our next question from Omar Saad, Evercore ISI.
Thanks for taking my question. Congratulations to everyone in the room. It's actually really great to see V.F. get back on the M&A horse again, Steve and Scott.
Thanks, Omar.
I want to ask a little bit about the B2B versus B2C dynamic. As investors and analysts, we're very accustomed to the B2C side of the business, but B2B is a little bit more of a foreign animal to us. Help us understand, I think the footprint too, B2B versus B2C mix for Dickies versus you guys is quite different in your workwear business. Is B2B an opportunity for the Dickies franchise? Then help us understand what the dynamics are, the unique dynamics that exist in a B2B scenario that maybe we're not as well-versed in. Thanks.
Yeah. Omar, the B2B piece for Williamson-Dickie is about a quarter of their business, when you balance it against international and the D2C piece. The B2B piece, that's really where you're selling direct to businesses. It's the distributor network, where you're able to access the laundries, which is a very unique aspect to this workwear business. B2C is selling through the traditional retail applications. We have a particular strength at VF on B2B. It's one of the things that we think we're one of the best at. Our supply chain is able to react and The B2B is more of an at-once type of model, and that's where our supply chain has put us in a really strong advantaged position in the past.
As we look moving forward, bringing this website capability in the D2C piece, I think, again, it will be an area where our supply chain, married with the Williamson-Dickie's supply chain, will put us in a very advantaged position to be able to react and move with consumer demand in a very unique and powerful way, just through the knowledge that we'll be able to see with how this consumer is trending.
I would just add to that too, Omar. Based on some of the work we've done, we're a low-cost producer too, so we have a cost advantage on top of the service model that Steve just mentioned.
Got it. Thanks, guys. Congratulations. Good luck.
Thanks, Omar.
Thanks, Omar.
We'll take our final question from Camilo Lyon, Canaccord Genuity.
Thanks, guys. Thanks for taking my question. With the robust portfolio of workwear brands that you have, do you envision combining the workwear brands in your D2C retail presentation over time, or do you think you'll operate the brands separately? This goes to your comment that you've come back to a few times, Steve, about having D2C be a strong opportunity going forward to grow the entire coalition.
Camilo, it's a very interesting opportunity. One that we are spending some time looking at, and we do think there's unique opportunity. How that would look, we're not entirely sure. I think we'll focus on the core distribution that exists today, as we begin to really understand one another well and look at the opportunities through the integration process, we'll be able to really uncover whether there is a true opportunity to have a multi-brand retail environment, both brick and mortar and digital. Similar to what you see going on with some of our other brands. It's an interesting opportunity, and one that we'll certainly look at.
Secondarily to that, is there an opportunity to leverage your existing brands? You've mentioned Vans as being a lifestyle choice for that workwear consumer, that Dickies consumer. Is that an opportunity to begin selling Dickies in the Vans stores? Kind of reversing that, the prior question that I had.
Yeah. No, that's a good question. Our Vans team woke up this morning and read the same news that you did. I'm sure they're thinking about this themselves, and they will certainly be part of the conversation. As we go forward, thinking about how we can leverage two really powerful brands to collectively speak to that action sports and expressive creative consumer.
Okay, great. Just the last question I have. One of your slides, you talked about the workwear brands in your portfolio, the several large competitors of which Dickies was one and now is in your portfolio, obviously. When you speak about further hunting for the next acquisition, are you going to remain in this category, or do you still have an expansive view of your opportunity set?
Yeah, I think, Camilo, the way to have you think about this, and we talked about this in Boston, is we want to really marry the knowledge that we have of our core consumer and look at how we apply our unique skills and capabilities across our portfolio and where are those new value pools that we can move our portfolio towards to compete in this new environment. Workwear is very interesting to us. This is a major move against that commitment that you heard us talk to in Boston. We are absolutely open to a broad view of where our consumer is shopping and acting and the products that we're uniquely capable and qualified to work on.
It's really about tapping into that experiential aspect of where our consumer's going and making sure that we're front and center and present in their life, really bringing solutions to the different product needs that they have.
Got it. Congratulations on the transaction, guys.
Thank you.
At this time, I'd like to turn it back to Mr. Rendle for closing remarks.
Yes. Thank you, everybody, for being with us today. This is obviously a very exciting moment for both V.F. and Williamson-Dickie, as we begin to now look at building that integration plan that will bring these two great businesses together. If I just leave you with, we really see ourselves in this combined entity as one of the strongest advantage owners in this space. This will help reduce our exposure to the more difficult distribution channels, referencing back to the hourglass distribution view that we have. Over time, doubling gross margin to unlock value is absolutely in our wheelhouse and how we look at really integrating these two businesses to just drive greater value to our consumer. We look forward to talking to you more about this in the coming weeks and months.
Again, just thank you for all of you joining us today, and thank you to Philip to engaging us in this conversation and then bringing us to this exciting point in time.
That concludes today's conference. We thank you for your participation. You may now disconnect.