Good day. Welcome to the V.F. Corporation first quarter 2013 earnings conference call. Today's conference is being recorded. At this time, I'd like to turn the conference over to Lance Allega, Director of Investor Relations. You may begin, sir.
Thank you, operator. Hello, everyone, and thank you for joining us today to discuss VF's first quarter 2013 results. Before we begin, I'd like to remind participants that certain commentary included in today's prepared remarks and the Q&A session may constitute forward-looking statements under the definition of federal securities law. Forward-looking statements include management's current expectations, estimates, and other projections about our business results of operations and the industries in which VF operates. Actual results may differ materially from those projected in the forward-looking statements. Important factors that could cause actual results to differ materially from those projected in the forward-looking statements are discussed in the documents filed with the SEC. Additionally, participants on today's call may discuss non-GAAP financial measures. You'll find the appropriate reconciliations in our press release, which was issued about an hour ago, and at our website at vfc.com.
Joining us on today's call will be VF's Chairman and Chief Executive Officer, Eric Wiseman; Bob Shearer, our Chief Financial Officer; and our Group Presidents, Scott Baxter, Karl-Heinz Salzburger, and Steve Rendle. Following our prepared remarks, we'll take your questions. We'll ask that you limit your questions to two to allow us to get to as many of you as possible. In the event that you have additional questions and are not covered by others, please re-queue and we'll do our best to get back to you. Thanks for your cooperation on this. Now I'll turn the call over to VF's Chairman and CEO, Eric Wiseman. Eric?
Thanks, Lance. Good morning, everyone. Thank you for joining us today. 2013 is off to a great start for us, with results beating our expectations. Consistent with what we told you in February, our first quarter revenue growth rate was a few points below our full-year target of 6%. As we've seen over the last year, our diverse model continues to deliver great bottom-line results, especially from our lifestyle brands and our international and direct-to-consumer businesses. In fact, our record earnings per share in the first quarter was a little better than our expectations. With record revenues and a record gross margin, it's another fantastic quarter for VF. During the quarter, our outdoor and action sports business grew revenues by 10% amid concerns about fluctuating weather conditions impacting our cold weather brands.
Our international business was up 6%, despite continued economic weakness in Europe and an inventory overhang in China. Our direct-to-consumer business rose 12%, with strength both here and abroad, even in a generally sluggish macro environment. While the economic environment is overall a headwind, we are very encouraged and proud of the consistent improvement in our profitability. Both gross and operating margin showed substantial expansion over the prior year's first quarter, with gross margin up 240 basis points and adjusted operating margin rising by 130 basis points. Together, this growth in profitability enabled VF to deliver a 25% improvement in adjusted earnings per share to $2.43. Looking to the balance of 2013, with a slightly stronger than expected start to the year, we are raising our full-year adjusted earnings guidance by $0.05 per share to $10.75.
With three quarters still ahead of us and many dynamics at play, we feel it's prudent to maintain a fairly cautious approach to guidance while we continue to seek and invest in new opportunities for long-term growth. Speaking of long-term growth, it was a little over two years ago that we got on stage in New York and took you through our five-year plan. By every measure, revenues, margins, and earnings per share, we are well ahead of the 2015 plan we presented then. It's time to get back on stage, which is exactly what we plan to do on June 11th in New York, where we will take you through the next five years of VF strategies and the performance you can expect us to deliver. Back to 2013. This is a year of opportunity.
Opportunity to strengthen our brands, to innovate more meaningfully, and to connect with and reach even more consumers. Our diverse portfolio of brands, backed by deep consumer insights and a relentless focus on operational excellence, is built to inspire consumers and generate consistent returns for our shareholders. We continue to invest thoughtfully and consistently behind key drivers of top and bottom-line growth, these investments are certainly paying off. With a great start, the right strategies, and superior execution, we are looking forward to delivering another outstanding year to our shareholders. With that, I will turn the call over to Steve, Karl-Heinz, and Scott, who will take us through the top five VF brands, then Bob will close out with a deeper dive into our financial results. Steve?
Thank you, Eric. First quarter global revenues for The North Face were up 6%, fueled by very strong growth in the brand's D2C business, which increased 25%. Globally, we also saw a slight increase in our wholesale business. In the Americas region, revenue was up 3%, helped by winter weather that arrived mid-January and continued until just recently. In fact, our D2C performance was strong in the quarter, up low double digits, and the highest comps in over a year, driven by solid sell-through of winter-related apparel, including insulated jackets, fleece, and shells, as well as spring-weight rainwear and performance athletic apparel. Clearly evidence that The North Face brand is strong and its product coveted as the industry's best, all of which gives us confidence that we have a great year ahead of us.
Looking out towards fall, as expected, retailers have remained cautious with their orders, which are in line with our expectations. Definitely a good start to 2013, and great confidence in our ability to achieve high single-digit revenue growth for the full year. As I outlined on our year-end call, we are focused on three key areas to grow The North Face brand in 2013: product innovation, marketing, and D2C. With the first quarter behind us, we're definitely firing on all cylinders in these initiatives. First up, product. Product innovation is at the core of The North Face DNA. It motivates performance, stirs adventure, and inspires people to get outdoors. Building on the success of our activity-based model, we've got a great new collection due out this fall known as Steep Series.
This brand-new premier line of snow sports apparel is inspired by our expedition-level products and will be complementary to our outdoor Summit Series collection. Featured this fall in ski specialty shops, our own stores, and online, Steep Series will help further position The North Face winter action sports products as a natural extension to the core brand. Of course, we're really looking forward to this fall's launch of ThermoBall, a product innovation we see as a real game changer and a core component of our Science of Warmth technology platform. ThermoBall offers versatility for a variety of conditions and will play a major role in our amplified transitional outerwear offering this fall. Finally, our FlashDry technology, an amazing innovation designed to improve moisture management and temperature regulation, continues to be included in our increasingly greater number of styles and is exceeding our expectations.
Hot off the presses, we just learned that seven products from The North Face were named among the best recommendations from the Outside magazine in their 2013 buyer's guide. From our Casimir 36 backpack and four different jackets to our new Ultra Guide trail running shoes and the Mica FL tent, which won the Gear of the Year award, very exciting call-outs and further confirmation that our activity-based model and focus on innovation is paying off. On the marketing and D2C fronts, we're planning a significant acceleration in investments behind our digital and online branding efforts to help drive brand awareness and increase conversion in our own stores. We've also made great progress on improving The North Face omni-channel experience. This initiative enables consumers to research and view products online, pay for them, and then pick them up at their local North Face store.
It also allows quick, easy, and free web purchase exchanges in all of our retail stores, a very important and seamless feature to create a great shopping experience. Such a great experience, in fact, that Forbes magazine recently recognized The North Face app as the highest in customer satisfaction. We're also working to better leverage our loyalty and CRM programs. We've seen early success with The North Face VIP program, which combines web and store transactions to accumulate points towards future transactions. With more than 100,000 members already in our system, we have a two-way conversation with shoppers that purchase more frequently, have higher dollar baskets, and are clearly the most hardcore brand evangelists we have. The great news is, our marketing and consumer awareness efforts are paying off.
In fact, our latest annual brand equity score improved markedly in 2012 from 2011, which validates the increasing momentum and relevance of The North Face brand with consumers. With amazing innovations supported by great marketing and an elevated retail experience, there's a lot to look forward to for The North Face brand in 2013. Now here's Karl-Heinz to run through the international business.
Thank you, Steve, and good morning, everyone. Outside the Americas, The North Face brand grew 11% with balanced strength on a DTC and wholesale basis. In Europe, The North Face saw a modest increase in revenues driven by strong results from our DTC business, offset by a modest decline in the wholesale channel. In fact, The North Face DTC business in Europe was a real bright spot in the quarter with nearly 30% growth, including more than 30% growth in online sales. Although the overall consumer environment remains soft in Europe, our DTC comps were up at low double-digit rate, which demonstrates the brand is strong and gaining share against our competitors. We are confident to say that we believe that The North Face is the best-positioned brand in the outdoor industry in Europe.
On the product front, given the great product innovations mentioned by Steve, as well as our European Techwear collection and the strong equipment offering, we are quite pleased with consumer reception and growing brand awareness. Specifically, we see robust opportunities for European-specific fits, colors, and regional relevant product to create an even greater connection with our consumers' active lifestyles. Speaking of connecting with consumers, we continue to find great ways to share our brand story and engage them on many levels. A highlight from this winter was our sponsorship of the Freeride World Tour, the world's premier big mountain free skiing and snowboarding competition, where our athletes won the men's snowboard and men's skis competition. This tour was viewed live by over 300,000 people with hundreds of videos and articles available online and in print.
Turning to Asia, we continue to see excellent momentum for The North Face brand with revenues up nearly 40%, driven primarily by outstanding growth in China partner door expansion and a larger spring/summer product offering. In China, we opened 20 new partner doors and successfully converted Hong Kong to an owned market during the quarter, which added an additional 60 partner doors. Our efforts here are also focused on building brand awareness and engaging consumers around the outdoors. In fact, we recently hosted the largest amateur ski and snowboard competition in China with more than 400 participants. We are also currently executing an integrated marketing campaign to promote our spring/summer series and hiking footwear. The industry-best product, improving retail experience, and leading the outdoor conversation with consumers gives us great confidence in 2013. Now, let's move on to Vans. Steve?
Global revenue for Vans in the first quarter was up 25%, with strong double-digit growth in all three regions, including both the wholesale and D2C businesses. This impressive performance puts the brand well on track to become VF's second largest brand in 2013 behind The North Face. Momentum continued in the Americas region with more than 20% growth on revenues balanced across our D2C and wholesale channels. Of particular note in our wholesale business are very strong sell-throughs of men's apparel, a business that is gaining significant momentum. In fact, on a year-over-year basis, it's up more than 50%, a great sign that our styles and efforts to connect with consumers are working in concert to drive substantial growth. On the footwear side, we continue to perform very well. In many cases, Vans is the top performer in many of our key accounts.
Building on our core classics business with new materials, prints, and collaborations from Metallica to Marvel Comics and new styles such as the Authentic Hi, we are broadening the opportunities for growth in our core business. As you know, one of our key growth drivers is geographic expansion. This strategy, with particular focus on the East Coast in 2013, is an ongoing success. By working closely with key partners and opening our own retail stores, using aggressive target city marketing, and providing product innovation in weatherized classic Vans footwear and apparel, we are driving awareness and affinity for Vans in big, important new markets. We continue to excel on the consumer connectivity front as well, engaging consumers in creative activity-based ways. The best and most recent example is the Vans Custom Culture National High School Art Competition.
The contest, which is in its fourth year, drew more than 1,400 entries from high school art classes in all 50 states. Charged with creating a work of art from a blank pair of Vans shoes, this year's winner will be crowned at the Whitney Museum in New York in June, receiving $50,000 to support that school's commitment to art. Continuing the focus on geographic expansion and consumer connectivity, we also successfully launched the first stage of our new global brand campaign called Anthem. The Anthem campaign seeks to significantly increase brand awareness through a unified global effort which centralizes the historical authenticity of Vans' off-the-wall culture. Finally, we're hard at work laying plans as the new sponsor of the US Open of Surfing in Huntington Beach in July.
As the largest surf contest of its kind in the U.S., we can't wait to bring Vans' off-the-wall culture to the epicenter of surf. Now I'll pass it over to Karl-Heinz, who will take us through some international highlights.
Outside the Americas, Vans revenues were up 30% with similar wholesale growth and D2C growth north of 40%. In the first quarter, Vans continued its outstanding momentum in Europe, with revenue up more than 30%. We continue to see strong share gains in this crucial market, which gives us great confidence that we'll deliver another year of impressive growth. Impressive, in fact, that Vans is on track to become VF's second-largest brand in Europe behind Timberland this year. Our efforts to drive Vans' off-the-wall culture deeper into Europe are also proving successful. We held House of Vans Berlin in January, hosting three nights of music, photography, skate culture, and street fashion. This event drew almost 5,000 attendees with 370,000 visitors participating via live webcast.
This event served to bring youth culture together, a unique opportunity for us to educate consumers about our products amid a backdrop of music and art, ultimately creating a deeper emotional connection with the Vans brand. During the quarter, we opened stores in Paris, Maastricht, Glasgow, and Düsseldorf and underwent a major retrofit of our Carnaby store in London to showcase our new Vans retail concept. Vans Asian business also posted strong results in the first quarter, growing more than 20%. Here, we have seen success with product collaboration that have regional and local aspects, such as our Year of the Snake product line in China. These products have proven to be very effective in ensuring that the brand remains relevant in the region and inspirational to the youth culture there.
Here, too, we are using special events like the House of Vans experiences we've hosted in Europe to drive consumer interest and lead the conversation of youth culture. I'm very happy to report that we successfully converted South Korea to an owned market during the quarter, an exciting country for future growth. Overall, a great start to the year for Vans global and much more to come. With that, let's move on to Timberland.
Thanks, KG. In line with our expectations, global revenues for Timberland were up 2% in the first quarter. As we start our second full year of VF ownership, we're very pleased with the progress we're making against our strategic initiatives to position the brand for long-term growth. Our expectations for full-year revenue growth remain in the mid-single digit constant dollar range. In the Americas, revenue increased at the mid-single digit rate. With more seasonable weather conditions and efforts around rigorous product segmentation and right-sizing distribution, Timberland is gaining traction with growth in the brand's D2C and wholesale businesses. On the product front, both core and new programs performed well, demonstrating what we believe to be a genuine interest in both heritage and new styles. The men's boots business saw great success due to a combination of proactive inventory and style management.
A great example of this is Timberland's classic yellow boot, which achieved strong growth at full price in the quarter, reinforcing and underscoring its iconic status. That said, Timberland is not relying solely on its product archives to drive growth. New styles like Stormbuck Light Oxford and Newmarket Cupsole 2.0 saw great results in the first quarter following well-supported launches. These products embody a successful blend of classic and new, which is the backbone of Timberland's Best Then, Better Now marketing campaign. The new campaign, which is set to launch this fall, marks the celebration of the company's 40th anniversary. On the Timberland PRO side, we're also building momentum with great innovations like our anti-fatigue technology and new products like Hyperion and Boondock. PRO continues to set the standard for the comfort and protection needs of this very demanding industrial consumer.
Timberland's D2C business achieved strong double-digit growth in the quarter. More favorable weather and our targeted operational initiatives designed to drive conversion proved quite successful. In our own doors, we're also continuing work on creating a more streamlined premium selling environment, one that allows us to better showcase the product and brand, and ultimately provide a much more enjoyable consumer experience. Online, we're working to strengthen our mobile capability, upgrading consumer messaging, and better leveraging affiliates and partners. Together, these initiatives are paying dividends. Consumers have responded very well, with conversion up in all formats throughout the quarter. Overall, a great quarter and very pleased with the progress we're making. Now, here's Karl-Heinz to take you through Timberland's international business.
Timberland's revenue outside of the Americas were flat year-over-year, including a mid-teen increase in Asia, offset by a mid-single-digit decline in Europe. In line with expectations, revenues for Timberland in Europe were down at a mid-single-digit versus last year. In a still soft market, our DTC business was a bright spot, up at mid-teen rate. This was offset by low double-digit decline in our wholesale business, with continued particular weakness in Southern Europe, Timberland's largest market. Echoing Steve's comments, here, too, we are very encouraged by the progress we continue to make against our strategic initiatives. In fact, although it's still early, we're happy to report that initial signs for fall footwear bookings are positive, a clear indicator that gives us great confidence that we are positioned right where we expected to be.
In footwear, we did see some bright spots in the quarter, including success in our transitional product offering, Stormbuck assortment, and in our classic collections for both men and women. We also saw positive results in our apparel business, with specific strength in outerwear and pants. With this year making Timberland's 40th anniversary, our marketing efforts are focused around craftsmanship and heritage. We also recently deployed a new email marketing system, which will allow us to target consumers on a more customized and relevant basis and gain key insight going forward. Asia's Timberland business continues to perform well and grew at mid-teens rate both in wholesale and DTC, with positive results across all product categories. We opened one new retail door during the quarter as well as one e-commerce site, both in China, and are making great strides connecting with consumers in the region.
I'll turn it over to Scott to take a look at Wrangler.
Thank you, Karl-Heinz. Good morning, everyone. First quarter global revenues for Wrangler were down 2%. In our Americas business, revenues were about flat, with increases in our Western specialty and Latin American businesses, offset by a slight decline in sales to our U.S. mass channel. Recall that in the first quarter of 2012, we pulled forward seasonals due to a very early spring here in the U.S., which created exceptional growth in that period. We expect second quarter global revenues for Wrangler to increase at a mid-single digit rate. Overall, the Wrangler business is in line with our expectations for the full year. In our mass channel, our jeans and Wrangler Advanced Comfort products continue to gain significant momentum, and our Premium Performance Cowboy Cut in our Western specialty business is exceeding our expectations. Really spot on with this very important and growing consumer base.
We're also hard at work with our key retail partners, enhancing our brand's in-store presentation. From mass to specialty, we have a number of initiatives geared at more meaningful ways to tell the Wrangler story, a story of innovation, authenticity, and value. We're also seeing encouraging results and success with our expansion in the sporting goods, outdoor, and regional mid-tier locations. All very important channels that allow us to really dial in the product, brand presentation, and how we tell the Wrangler story to a broader range of consumers. Quarter after quarter, I seem to mention it, and I will again here too, Wrangler in Latin America posted strong results, fueled by growing brand awareness and great reception to our retail expansion, particularly in Argentina and Chile. On the marketing front, we're excited to announce that we drafted New Orleans Saints quarterback Drew Brees to join the Wrangler team.
Drew's dependability, work ethic, family values, and personal generosity make him a natural fit for Wrangler. Stay tuned and look for a new campaign expected to launch sometime in August. Now, here's Karl-Heinz with a few words on Europe.
While our Wrangler business in Europe was down at a mid-single-digit rate, it was also in line with our expectations. We are seeing some bright spots. Our innovation focus on denim performance and fit is paying off. Our new products are selling too well. As a result, we are experiencing strength in the emerging markets, particularly Russia, and a few of our key accounts across Europe. Due to a continued focus on operating efficiencies, our profitability continues to improve. Now back to Scott with Lee.
Thank you, Karl-Heinz. Revenues for the Lee brand on a global basis were down 6% in the quarter, which was about in line with expectations. Here too, the comparison was pretty tough due to the seasonals pulled forward in last year's same period. In 2013, we continue to expect modest growth on a global basis, driven by mid-single-digit growth in the Americas, with particular strength in the second and third quarters as new introductions in seasonal product lead the way. Revenues for the Lee brand are expected to increase at a mid-single-digit rate. Given the ongoing challenges in the mid-tier channel, which ultimately we feel are short-term in nature, we remain vigilant about creating new growth opportunities. Advanced fall bookings for new product, including Perfect Fit for women and Modern Series for men, are very encouraging and a clear indicator that our products are being well-received.
Another great example, one that you've heard me talk about on previous calls, is our Lee Platinum Label collection. A few quarters ago, we started with a small test of this product with one of our key department store partners. We're pleased to report that it has continued to gain sizable momentum. In fact, following strong consumer response, we're adding an additional 150 doors this year, which should bring the total to nearly 450 locations by year-end. A great case study of how innovative product and consumer connectivity can generate an excellent long-term growth opportunity. Now back to Karl-Heinz to discuss Lee's international business.
In Europe, during the first quarter, Lee brand revenues were down at a mid-single-digit rate. Here as well, we are beginning to experience some success with our new product innovation. During the quarter, we saw good sell-through of our new Stretch Deluxe women's product across most of our key accounts. This quarter, we are launching a new collection for men called Blue Label. In our DTC business, although still quite small, we are encouraged by double-digit comp performance in our new retail format. We will continue to roll out this new format with additional owned and partner stores opening in 2013. This is on the heels of successful launches in 2012. Lee also benefited from improved operating efficiencies and is delivering stronger profitability. The business is on track with our full-year expectations. In Asia, Lee continues to be impacted by efforts to rightsize channel inventory levels.
As we stated on our fourth quarter call, Lee's performance in Asia will be particularly challenging in the first half, with the expectation that the business begins to normalize in fourth quarter of this year. Even though sales were down, profitability exceeded expectations, driven by favorable product mix and lower product costs. We have seen solid results with the recent introductions Urban Riders, V Think, and Stretch Deluxe. Our new products are doing well, just tempered by current channel dynamics. Additionally, we are increasing the number of partner door locations, executing very focused marketing campaigns, and expanding our digital and e-commerce capabilities. Now I'll turn it over to Bob, who will take you through our financial highlights in greater detail.
Thanks, Karl-Heinz. I'll wrap up today's call with some additional commentary around our first quarter results and our strengthened full-year guidance. VF's total revenues were up 2%, which was in line with our expectations. We called it back in February, we indicated that we expected just modest growth in the first quarter due to tough comparisons against the very strong performance in last year's first quarter, in part due to some timing shifts in shipments. We're tracking right on plan. As a reminder, our revenue comparison was negatively impacted by about 1% from the sale of John Varvatos in April of 2012. Gross margin, a key component of VF's long-term growth story, was right in line with our expectations, improving by 240 basis points to an all-time high of 48.1%.
As discussed in the press release, we saw improvements across nearly all our businesses, with the biggest improvement coming from our Jeanswear Coalition, as well as a continued shift in our mix toward higher-margin businesses. For the full year, we remain very comfortable with maintaining our previous guidance for a 100 basis point improvement in gross margin. Our SG&A ratio as a percent of revenues rose 100 basis points to 34.4% in the first quarter. Half of that increase came from our growing D2C business, and the other half is due to higher levels of marketing spending. This is a significant year of investment for us in direct-to-consumer, with an all-time high number of new store openings planned. As you know, most of the benefit from those new store openings will come in the second half of the year, when our direct-to-consumer business is strongest.
As previously indicated, we are increasing our marketing investments behind our brands given the success we've had from those investments, supported by the work we've done to measure their returns. That said, we remain very disciplined about controlling costs and focusing investments across all our businesses and brands to ensure the right balance between growth and profitability. Despite these increased investments, because of top-line leverage on a full-year basis, we expect that our SG&A ratio will remain relatively flat for the year. In terms of operating margin, our strong gross margin performance helped drive a 130 basis point improvement in adjusted operating margin to 13.8%. Here, too, we remain comfortable with maintaining our full-year guidance of an increase in operating margin by nearly 100 basis points.
That brings us to the bottom line, where adjusted earnings per share, which excludes Timberland acquisition-related expenses of $0.02 per share in the quarter, grew by 25% to $2.43 from $1.94 per share last year. Earnings in the quarter included a $0.12 per share discrete tax benefit, primarily related to the impact of U.S. tax law changes enacted in 2013, which were retroactive to 2012. Many refer to this as the fiscal cliff impact. It's important to note that benefit was anticipated and built into our plans. On a GAAP basis, which of course also included the tax benefits, first quarter net income was $270 million with a 26% increase in earnings per share to $2.41. A few quick comments on our overall coalition results. First, outdoor and action sports. We continue to be really pleased with our results here.
Our brands are strong and growing, gaining share and expanding around the world, which should lead to another great year of record top and bottom line performance. Total outdoor and action sports revenues were up 10%, with solid growth across our top brands, including a high teens increase in D2C and a nearly 10% increase in our international businesses. This coalition also continues to deliver outstanding profitability with a 40 basis point improvement in operating margin in the quarter to 16.4%. Jeanswear revenue growth took just a bit of a breather this quarter, we did anticipate somewhat challenging comparisons. You'll recall that last year, Jeanswear posted exceptionally strong revenue growth in the first quarter due to early shipments in the U.S. of spring seasonal products, the rollout of the Rock & Republic brand, and a strong Asian jeans business.
This year, the timing of shipment of those seasonal goods in the U.S. has returned to its normal cadence, our jeans business in Asia was negatively impacted by channel inventory issues, as we previously discussed. The real story in Jeanswear this quarter is around profitability, with operating margin reaching 20%, including improvements in both the Wrangler and Lee brands across every region of the world. Congrats to our global Jeanswear teams for delivering this extraordinary performance. Turning now to VF Imagewear, where revenues declined 9% versus last year. This too was pretty much right in line with our expectations, given very tough comps in our image business where revenues increased over 20% in last year's first quarter, helped by some catch-up in shipments of strong orders in oil and gas. Impacting this quarter's results was the timing of a program renewal, which is expected later this year.
In terms of our licensed sports business, revenues were flat year-over-year. We're looking forward to stronger top-line results in our VF Imagewear coalition in the second half of the year based on a strong pipeline of new product initiatives in both the image and licensed sports sides of the business. In terms of profitability, you likely noted the decline in operating margin cited in the press release, which is due primarily to reduced sales volumes. Sportswear revenues were up 4% in the quarter, with growth tempered by a shift in the timing of Nautica wholesale shipments from the first to the second quarter. On the D2C side, Sportswear achieved growth of more than 20%, reflecting healthy double-digit gains in both Nautica and Kipling's D2C businesses. Our sportswear business is headed toward a great year, we expect second quarter revenues to grow by a mid-teen %.
Since the sportswear and contemporary businesses were not yet covered on this call, I'll provide a little bit more color around these two businesses. Nautica achieved modest revenue growth in the quarter and continues to benefit from its focus on performance benefits, easy care, wrinkle-free, and moisture-wicking, now built into nearly half of its product line. With its men's sportswear business delivering consistently solid performance, Nautica is expanding its presence on the women's side. Building off solid results both online and in its outlet stores, Nautica is testing a new women's sportswear line in department stores. We're really excited about the potential of this future growth for the Nautica brand. A quick word on Kipling. The brand continues its run of double-digit growth in the U.S., led by its innovative crinkled metallic nylon bags, and in backpacks, accessories, and totes.
The steady improvement in sportswear profitability we saw throughout 2012 continues, with operating margin of 14% in the quarter and an 80 basis point improvement in operating margin. All in all, a good start to the year and a great year ahead for our sportswear group. Finally, contemporary brands. Keep in mind that the comparisons here are impacted by the sale of the John Varvatos business, which occurred in April of 2012. If you take Varvatos out of 2012, revenues were down 4% in the quarter, with an increase in D2C revenues offset by a decrease in wholesale sales. Contemporary business in premium department stores appears to have softened a bit in the first quarter, a trend we see continuing in the second quarter.
With strong and well-received product collections for the fall, we expect the business to get back on track in the second half of the year. Now of course, no V.F. earnings call would be complete without a couple comments on two primary growth drivers, international and direct-to-consumer. Total international revenues were up 6% in the quarter, with growth in all three regions, Europe, Asia, and the Americas. The growth was well-balanced between D2C and wholesale. Within international's developing D2C businesses, revenue growth was at a high teen percentage. Our first quarter international results were also right in line with our expectations. Taking a look at our direct-to-consumer results on a global basis, first quarter revenues were up 12%, or 14% excluding the impact from the Varvatos exit.
With double-digit increases across nearly all of our outdoor and action sports brands, Nautica and Splendid/Ella Moss, it's clear that the investments we continue to make in our D2C businesses are really paying off. Direct-to-consumer is a big part of our immediate and long-term growth plans. In this first quarter, we're right on track with both our growth expectations and profitability improvements. Ending with a couple of balance sheet and cash flow highlights, we continue to be incredibly proud of the rigorous discipline around managing our inventories, which were down 7% year-over-year. Also during the quarter, we repurchased a total of 1.7 million shares for approximately $280 million and contributed $100 million to V.F.'s pension plan, which is now nearly fully funded. Turning to the remainder of the year, let's revisit our full-year outlook. We continue to expect 6% revenue growth to approximately $11.5 billion.
With a great first quarter behind us, adjusted earnings per share are now expected to rise to $10.75, with a $0.05 increase over our prior guidance of $10.70, and representing a 12% increase over 2012 levels. As noted in our press release, it's important to remember that last year's second quarter adjusted earnings per share results of $1.11 included a $0.10 per share discrete tax benefit primarily related to the settlement of prior years' tax audits. There were two additional items that were excluded from adjusted earnings per share due to their unusual nature, but obviously included in the $1.40 per share reported on a GAAP basis. They were a $0.32 per share benefit related to the sale of John Varvatos and $0.03 per share of acquisition expenses related to Timberland.
Taking a look at the revenue cadence for the remainder of the year. We expect second and third quarter revenue growth to be more consistent with our full year growth expectation, and the fourth quarter to see the strongest comparison of the year, driven by the growing contribution and expansion of our direct-to-consumer business. One last item. Our assumed euro to dollar rate remains unchanged at 130. At this rate, the impact of a $0.05 move in the euro against the dollar would be about $60 million in revenues and $0.10 in EPS. To wrap it up, we're off to a great start for the year. Across nearly all key measures, we're right on track with where we plan to be.
With the strongest brand portfolio in our industry, improving profitability with a clear path to continued margin expansion, and a balance sheet that is strong and flexible, we look forward to another year of strong growth. In fact, the VF story is better than ever, and we're really looking forward to sharing our new five-year plan with you at our Investor Day in June. We hope all of you can join us. With that, we've concluded our prepared remarks, so I'll hand it back to Eric.
Thanks, Bob. No real additional comments. We're thrilled with our start to the year, confident in our outlook, and ready for your questions.
Thank you. If you would like to ask a question, please signal by pressing *1 on your telephone keypad. If you're using a speakerphone, please make sure your mute function is turned off so that your signal to reach our equipment. Again, press *1 to ask a question. We'll pause for just a moment to allow everyone an opportunity to signal for questions. We'll take our first question from Kate McShane with Citi.
Bob, I was wondering if you could help us understand, your inventories look like they're in very good shape on the balance sheet. Regionally, can you walk us through what the inventories are like in Europe and China at this point in time?
Yeah. Actually, Kate, we're in good shape across the board. As you know, this is an area we've put a lot of focus on, and that focus has been placed on our global inventory levels. The calls that we've referenced in the past, we do those calls on a global basis and touch base with our leaders around the globe. Our inventories right now, across our businesses, across our brands, and across our geographies, are really in good shape.
Okay, great. My second question is, I was just wondering if you could talk through your backlogs into the back half of the year now that you have an increased visibility into that. Were the backlogs better or worse than you expected when you last spoke to us in February? Is there still the possibility for The North Face to get more orders at this point in time for the winter?
Hi, Kate. This is Steve. I'll take this question since you seem to have The North Face in the middle of it. We've come through the fall booking season. We mentioned the caution that's in the retail community. This year's booking sequence is a little bit longer. There's a longer tail to this than we've seen historically. It's a little early for us to cite actual numbers, but I can tell you that the orders that we're taking in are very much in line with our expectations and our high single-digit guidance that we gave in our year-end call.
Great. Thank you.
Moving on, we'll take our next question from Bob Drbul from Barclays.
Hi, good morning.
Hey, Bob.
I guess I got two questions. The first one is on Timberland. Timberland Europe, are there any plans to rationalize the Southern Europe exposure? What could be the inflection point in the European business there?
Yeah. Bob, hi. This is Karl-Heinz here. As you know, Southern Europe is the largest market for Timberland in Europe, particularly Italy. We all know Italy at the moment is a tough spot to sell any kind of goods. We have two kinds of channels where we work with Timberland. One is the wholesale channel, which clearly suffered, especially in Southern Europe, as we said in the press release. The other one is DTC, which has two components. One is owned stores, and the other one, which Timberland has a great presence, is partnership stores. Now, even in a challenged market like Italy, where we have 150 stores, we have seen last year actually positive comps on our own partnership stores, and the same for Q1. We just won also an award in the U.K. for the hottest footwear company, which we're pretty confident.
Clearly, we're not immune from what is happening in the market. The fact that in our own stores, the comps are good, shows that the brand is strong.
Got it. Okay. My second question is around the mid-tier channel for you guys. Maybe Eric or Steve, but the denim business in the mid-tier and the outlook there and some of the other brands that you have in the mid-tier. Can you just help us understand how you have that estimated and forecasted for the rest of the year right now?
Hey, Bob. It's Eric. I'll take a shot at that since it's across VF. Our three biggest businesses in the mid-tier are our Lee jeans business, our Vans business, and our licensed sports business. There's really no change in our outlook from where we started the year. The channel has been a little difficult for a host of reasons that have been well documented in the press. The interesting thing is actually, it may get a little bit better for us than we're currently thinking. The reason I'm saying that is around the Lee business. JCPenney is indicating that they're going to try to attract their traditional shopper, and that traditional shopper was a good Lee customer.
To the extent they're successful at getting that traffic back in the door, we're very confident that the Lee brand has the right products and value equation to get more business. The Vans business in the channel has actually done pretty well. At JCPenney, in particular, who decided to use Vans as an action point to connect with youth consumers. Our Vans business is actually up. We're pretty confident about that. The licensed sports business is so much a factor of which teams are playing and who's winning. There's no change in that. Did that get to the heart of your question?
Yeah, definitely. Thanks, Eric.
Moving on. We'll take our next question from Michael Binetti from UBS.
Hey, guys. Good morning. Congrats on a nice quarter.
Thanks, Michael.
First off, maybe, Bob, you talk a little bit more about the gross margins for the year. Maybe look at the cadence over the next few quarters to help us with our models. Also, can you talk about maybe how much of the improvement in the quarter was from things like product costs versus longer-term drivers?
The cadence of gross margin, as you might expect, each quarter will show nice improvement in our gross margins. In the second quarter, the improvement will be less than it was in the first quarter. In the third and fourth quarters, it'll be a little less than it was in the second quarter. The bigger improvements, as you said, what drove the first quarter improvement, consistently seeing that 60 to 70 basis points from mix. In the first quarter of the 240 basis points, about 70 was related to mix and the remainder was related to primarily product costs. In the first quarter, a significant portion of that was related to Jeanswear. That'll continue, not as strongly, but will continue into the second quarter as well.
I'd repeat one of the comments that I made in my commentary, is that we expect to see gross margin expansion across the board in nearly every one of our businesses on a full-year basis. We saw that in the first quarter. We're seeing improvement across the board. Jeanswear clearly led the way in the first quarter.
Eric, if I could just follow up a little bit, maybe a little bit more color on Timberland. That's been in the spotlight as you guys look to try and accelerate that. Especially with the direct-to-consumer coming in at high teens was a pretty unexpected number and fairly good. Seems fairly good, particularly given unit growth might still be sluggish. Can you talk about the brand a little bit and what's going right now? You guys have talked a lot about how apparel will be launched in the second half. What maybe some of the other things you think are going right now and maybe look ahead to the apparel in the second half. Then maybe also just talk about the operational initiatives you mentioned that you're working on in the D2C doors there. Thanks a lot.
Okay, Michael. This is Steve. Karl-Heinz and I will split this. I'll cover the Americas piece and toss the ball to Karl-Heinz for the international piece. As I mentioned, we're encouraged with our Timberland business. Over 14, 15 months ago, we began to wrap our arms around this, begin to work diligently on a lot of the integration initiatives, which focus mostly on operational improvements and improving product and getting clarity around what the brand stands for. What you see coming into 2013 is that paying off across both our wholesale and D2C channels. Our product pipeline, as I mentioned, the heritage product as well as the new products, are resonating very nicely across all channels. Our marketing message is very clear, and you can see that in how consumers are responding in our online environment.
We're very looking forward to the launch of our new campaign this fall. The operational comments that I made around D2C. We have a new leader within our D2C channel, and that leadership team really bore down on the key performance indicators across the retail channel. We've focused very hard on that retail environment first and foremost, improving the clarity of the in-store, narrowing down the assortments, and focusing first and foremost on servicing consumers and conversion. We've seen that really pay off nicely and are very confident with how that will lead us on to the balance of the year.
Michael, moving to Asia first. In Asia, we continue to do well with Timberland. As I mentioned in the script, we are up both in DTC and in wholesale. We have great presence in Japan, in Malaysia, in Taiwan. Hong Kong, we have subsidiary. Also the brand is now embedded in our headquarter in Hong Kong, with our brands. They will particularly benefit for our knowhow we have in China. With Timberland, as we mentioned, we're just starting with China. That is for sure a great opportunity. Europe, I touched before. I always say we're not immune from what is going on in Europe, and we all know what the situation is. We do see great results, especially in our DTC, which is an indicator that the brand is healthy. We were up mid-teens, which is very strong in Q1, which give us confidence.
Also, as I mentioned, the fall orders are coming in actually a little bit better than we expected. All in all, Timberland, I guess we are pleased with this brand.
All right. Thanks a lot, guys.
Thanks, Michael.
Moving on, we'll take our next question from Erinn Murphy from Piper Jaffray.
Great. Thank you, and let me add my congratulations. My first question is actually surrounding the denim business in Asia. Understanding the inventory overage is just in the channel there, has there been any change in terms of how you're thinking about the potential stabilization there in the second half? How should we, in this context, think about China and the growth there as we progress throughout the balance of the year this year? That's my first part.
Hi, Erinn. Karl-Heinz here. Let me say again, Lee has been one of our strongest performers in the last years in China, and we don't change that in the midterm. It has been strong growth, very profitable. As we said, there's a short-term issue, this overhang in inventory in the channel, which, by the way, is only related to jeans. We don't see that in all our other brands, and they're all doing nicely, as we saw. You heard the numbers on The North Face. Long term, we're absolutely confident that we go back where we have been. As we mentioned, by the end of the year, we expect this to stabilize.
Okay. That's helpful, Karl-Heinz. I guess a 2nd question for you, following up on the European kind of macro situation. Have you seen any kind of change in consumer trends in terms of shopping patterns or even either channel preference? Maybe it is a little bit of distortion towards the DTC, just given the sustained weakness there. I guess 2ndly, if you could call out, and clearly Southern Europe is already very weak, and you've called that out as many companies have. Any other markets that either over-index or under-index relative to your average trend in Europe that could be helpful to kind of frame up the context there? Thank you so much.
Yeah. The good news is, we have a diversified portfolio of brands, which help us. The 2nd good point is we are not overexposed in one area. We're pretty diversified in many countries in Europe, especially in the big five, in the five countries and also in the emerging markets. Again, we see some softness for sure in Southern Europe, in Spain and Italy. Spain just announced numbers yesterday, they're not really encouraging. The good news is, again, because we have this diversified portfolio of brands, and you see the results, we still continue to deliver on brands are really stellar. We don't expect Europe to change significantly in the future. We don't expect it to get worse and probably not get better. Again, we are pretty confident.
On the DTC side, we said that it's a great opportunity for us going forward. We don't have the size of a DTC business we have here in North America, and we are building it up. We're investing in people, talents. We're actually accelerating now the opening of stores. Overall, our plans for Europe, while this year they're a little bit softer, really confirm what we have said, which is mid-single digit up. Longer term, we plan to go back to the usual growth rates we had in the past.
Yeah, Erinn it's Eric, I'll add just a little bit of color to that because it lets me speak about VF's model, which we think is so important to our consistent success. If you look at our big three brands in Europe, Timberland, Vans, and The North Face. The North Face and Vans are primarily built out in Northern Europe, and they're doing exceptionally well. Timberland, the biggest market is Italy. It's that portfolio that lets us get through a year like 2012. I think we were up 10% in Europe. The heads are nodding. That's the right number. We're looking at high single digits for this year. It really is because we're able to say, all right, if we can't affect the economy in Italy, and we can't, what we can do is increase the investment in our Northern European brands where the economies are stronger.
That's exactly what we're doing. That's why Vans has had so much success in Northern Europe, is we've just chosen to invest more there because that we can take action on, while we respond prudently where there are more challenges in Southern Europe. That's how we work our model. Thank you for letting me make that statement.
Just a final point. We never talk about the other brands. Clearly, the top three brands are the major drivers. This year, we saw in Q1, and particularly in the full year, on other brands like Smartwool, Napapijri, Kipling, Eastpak. We all expect them to grow in Europe this year, which is positive news.
Great. Thank you, guys. That's very helpful. Best of luck.
Thanks, Erinn.
Moving on, we'll take our next question from Omar Saad from ISI Group.
Thank you. Great job on the margin, guys. It's really impressive.
Thanks, Omar.
Wanted to follow up. I know the DTC mix has been one of the drivers on the gross margin side. Could you kind of remind us where you are in terms of DTC penetration, what percentage of the business it is overall, where it was a few years ago, and how high you think it can go over time? Cannibalization, with the wholesale channel, is that something you think about? How does online fit into your kind of long-range thinking about the direct channel?
I'll start with that. To respond to the first point in terms of the penetration that we have. In a few years, it wasn't all that long ago that our percentage was really quite low in direct-to-consumer. It's expanded very nicely over the past number of years. In 2012, D2C represented 21% of our total business. In 2013, we expect D2C to be 23% of our business, and we're excited about laying out our plans for the future over the next five years. It's safe to say that we do expect to continue to see direct-to-consumer expanding as a % of our total business.
Yeah, you asked about.
Online cannibalization with wholesale. Do you see any channel conflict there? Has that been an issue at all? Then online, how it fits in. Sure. Omar, Eric here. We try very hard to use this as a supportive strategy for our brands and to avoid cannibalization. We actually work with our wholesale partners. They know where we're going to put stores. A great example of this is Vans, which in the last two or three years has put up a lot of stores around New York City, around Boston, now around Philadelphia, where we didn't have substantial distribution, and we just didn't have the doors there that let the brand speak to the customers. We're putting the doors there. That's true in markets in Europe and in Germany. It's true in the U.K. That's how we look at it.
We have so much runway because we ended last year with roughly 1,100 doors across all of our brands across the world. We're so relatively undeveloped that we still see lots of runway before the cannibalization thing comes into play. The e-commerce thing is a tricky thing, because we don't know what that's. We can't really say where those customers are coming from, whether they're new customers to the brand, whether they used to shop in our stores or somebody else's stores. What we do know is we have to create a compelling way for consumers to engage with our brands from their phones, from whatever devices they have. We have to let them shop while they're there.
That's a rapidly growing piece of our business and a rapidly growing piece of the consumer experience, not just in the U.S., but also in Europe, where I think last year we put new websites up in seven countries. Yeah, that's correct. It was seven countries last year. We're beginning to do that there. I don't know how to discuss the cannibalization of that because we know it's the right thing to do. If it elevates the brand experience, which we think it does, it should be good for everybody. Omar, I guess I'd just add to that is all of that, of course, supported by a very strong profitability in our direct-to-consumer businesses and really high returns on the investments that we make. It's what gives us the permission and the reasons that we continue to invest heavily.
The last bit of color I'll add to that, because it gets to some of Karl-Heinz's observations about the strength of our DTC business in Europe, where our wholesale business is not so great in some markets. I do think that there, we're putting up our best. When we open a store, we're all in, and we bring the brand to life the best way we know how with strong inventory across all the styles. Some of our wholesale customers aren't able or willing to do that now in this environment. Our willingness to do that, I think, is helping us. It shows that when you put the whole brand out there in all of its glory at a retail environment, people are still shopping.
That's interesting. Thanks for all the color.
Thanks, Omar.
Moving on. We'll take our next question from Lindsay Drucker Mann.
Hey, good morning, everyone.
Morning. Morning.
Just, I was hoping you could, as we look at the SG&A line, can you tell us the increase, the split between sort of brand investment, DTC spending, and then mix or other corporate items? In other words, how much of the increase was a function of your investment in direct versus your investment in brand-building stuff?
Yeah, Bob would be happy to take that question.
Right. In the first quarter, there was a 100-basis-point increase in our SG&A, and it was evenly split. At the beginning of the year, on our initial guidance, we indicated that from a marketing standpoint, that we were going to up our spend this year. Right now, we continue to plan on an increase of more than $60 million on the marketing side and about double the rate of our revenue increase. As I said in my comments, the reason we're willing to do that is because we absolutely believe with a lot of confidence we're getting a great payback on those investments, and we support that with some science behind that in terms of measuring the results. Yes, the other side is related to the heavier investments in the direct-to-consumer side as well, the high number of new store openings.
In that first quarter, it was exactly half and half, the 100-basis-point increase.
On the direct-to-consumer piece, you talk about investments up front in the year and then generating greater returns on that in the back half. Can you just remind us sort of by concept where your increases in square footage are and where you expect to see the most improvement?
Yeah. What I can say is this, is that clearly, where we're investing in opening new stores and the high number of new stores is absolutely aligned with where we have our strongest returns. A high percentage of the new store openings is in the Vans brand around the globe, not just in the U.S., but in Europe as well. Then, of course, The North Face and Timberland really round out the top three. That's where the investments are going.
Yeah. That's split slightly more than half in the U.S. and slightly less than half internationally. It's a global strategy.
Okay. Have you given us actual store count?
We did. We said that we'd open about 160 new stores this year.
Okay. If you can comment at a high level how you guys think about the deal environment out there, the M&A opportunity, what the pipeline might look like, and how you think of as far as where multiples are today relative to where you'd like them to be.
Yeah. We're still actively looking. I normally respond this way, that I just don't know that the environment is a lot different than what it's been. A lot of the deals that we've made have resulted from longstanding relationships that have, again, been built over a period of time. It's the same approach that we use today, and we're still looking. In terms of multiples, the same kind of thing. The multiples, from what we see and what we're willing to pay, really don't vary a lot unless a business is really in a trough. We might have to pay a little more, right, in terms of the multiples. From our viewpoint, it just doesn't change a lot over time. Good brands are still treasured possessions, and to get the right brands, it requires the right kind of investment.
Okay. Thanks, everyone.
Sure. Thank you.
Moving on. We will take our next question from Mitch Kummetz from Robert W. Baird.
Yeah, thanks. Thanks for taking my questions. Two questions. Let me start with Bob. I am trying to gauge how conservative your gross margin guidance is on the year. You are saying up 100 basis points. It sounds like you expect mix to be about 60 to 70 basis points of that. Just in the first quarter, the benefit that you got from lower input costs, I think, puts you in the black 30, 40 basis points even on the year. What are the other puts and takes here that gets you to your guidance on the year?
Yeah. What happens, Mitch, of course, as the year goes on, we won't see the same benefit that we saw from jeans wear in the first quarter. Obviously, all this is about what we are comping against in the earlier part of last year. In the first quarter of 2012, we brought in very high denim costs, right? We were comping against that. That is why the big improvement. In the second quarter, you remember the sequencing last year as we looked at the improvements started to come as costs came down in the Jeanswear business. In the second quarter, we are matched up against costs which weren't quite as high as they were in the first quarter. As I said earlier, the improvement in gross margin in the second quarter will clearly be less than it was in the first quarter.
In the latter part of the year, from a cost standpoint, is more normalized at that point in time. We don't have the same kind of impact from the jeans wear side. We are seeing some benefit and even in VF Imagewear, for example. Our costs there were higher last year, and they have come down some. In the second half of the year, again, a much more normalized situation relative to product cost. What we have is we continue to have that mix impact that we very consistently talk about.
will help us in the second half of the year. That's really the way to think about it. A little bit bigger product cost impacts in the early part of the year, then that continuation of our mix benefit coming in the latter part of the year. Sure, we're always going to be a little bit cautious relative to the guidance.
There aren't any real puts and takes of significance other than the costs and the mix as we think about the year.
Those are the two bigger factors. What we're also seeing some benefit, it's just not at the same magnitude from efficiencies that we see controlling the inventories. When we reduce our inventories by over $100 million like we did in the first quarter, it just creates less exposure related to inventories. There are some efficiency gains. As I said, we expect to see gross margin improvement in every single business on an annual basis, that's not driven by product cost. It's just driven by controlling inventories and having great product and be able to earn the margins. There are some other factors, those are the big pieces.
The second question I had is, I'm just curious, with the slow start that we've had this spring, you guys talked about the impact that that had on Q1, some benefits, some negatives, what's the impact that has on Q2? How significant is your at-once business in Q2, do you think you lose out on any business there versus a year ago, given the slow start to spring, any maybe backup of in-season inventory at retail right now?
Let me take a shot at part of that. Last year, we shipped some of our spring merchandise in the first quarter because it was a warmer year. This year, that's going to be a second quarter shipment for pieces of our business. Compounded by the fact that it's been a cooler than normal quarter for us so far. We're shipping the goods this quarter, but right now they're not selling. How that's going to play out, my guess is summer will come, it will get warm, and that stuff will sell. The question will be, does the summer get here in time that they sell at full price? That I don't know the answer to. All in, I think we're going to get through that period just fine. Does anybody else want to-
Enhance that comment at all?
This is Scott. I think it equalizes itself out. I really feel good about the spring. I think it's a compelling offer that we have. We have a nice assortment out there, Summer will come. It's just a little bit about a six-week differential from last year. You saw the weather change about six weeks early last year. It's about six weeks later this year. If you go back to 2011, you go back to 2010, it's back to a normal pattern this year. Maybe a week or two cooler, but I feel confident going forward.
Yeah, Mitch, this is Steve. From an outdoor and action sports position here in the Americas, the season's actually lining up consistent with how our goods flow. Our biggest spring business in the first quarter would be Reef had a very good quarter. Follow that with Vans, The results that we posted for Vans were extremely strong. The North Face, though we saw very good sell-through of our winter weight goods, we typically sell quite a bit of spring rainwear in the first quarter, which then leads us into the sportswear sets in the second quarter. That's when equipment has shifted to opening up. All of that really is lining up nicely to deliver against our plans.
Okay. That's very helpful. I appreciate that. Thanks. Good luck.
Thanks, Mitch.
Thanks, Mitch.
Moving on, we'll take our final question from Christian Buss from Credit Suisse.
Yes. I was wondering if you could provide some perspective on the new channels of distribution you've opened up over the last year or so for Vans, and what you've seen there, what successes you've had. If you could talk a little bit about the 66 product, that would be helpful as well.
Sure. Yeah, Christian, this is Steve. Really the only new channel we've opened up over the last 12 months was moving into Foot Locker with the 66 collection. Otherwise, Vans stays very committed to their disciplined product segmentation strategy across a very clear set of channels. Our 66 collection has done very well with Foot Locker. They remain very confident, as do we, in the growth potential of that particular line extension as we access a consumer that's adjacent to our core action sports consumer, in that athletic space. Very positive and continue to see growth and commitment from where we've extended.
That's great to hear. Thank you very much and good luck.
Gentlemen, at this time, I'd like to turn the conference back over to you for any additional or closing remarks.
Yeah. Thank you all for your time and attention this morning. We do have an event coming up between now and our second quarter earnings release on June 11th in New York City, where we're going to be laying out our five-year growth plans. We're looking forward to that meeting. Hope you are as well.