Hello, everyone. Whether you're here in the room with us in New York or listening through our live webcast, thank you for joining us for part two of VF's Fiscal 2025 investor event, Reinvent to Grow. It's only been a few months since we invited you to hear about all the developments happening at VF, and we had so much to share with you that we decided to split the event into two parts: twice the fun for the IR team. In October of 2024, we unveiled our enterprise strategy and gave you our medium-term financial ambitions, and today we're here to talk about how we return to growth, and that is all about cultivating our amazing brands and driving long-term brand equity. Like many of us at VF, I am truly passionate about brands.
I have entirely immersed myself in brands throughout my entire career of 25 years plus, including some of the best-run and most enduring and iconic brands in the world. And I'm confident that you'll walk out of this room or leave our webcast today incredibly energized when you hear from our brand leaders. These individuals have tangible passion for their brands, and their motivation to dig in and do the work is truly inspiring. And the brands they've been chosen to lead are powerful and globally relevant, with so much growth potential ahead. We really couldn't be more excited. Now, before we get started, I am going to run through a few housekeeping items. At the end of today's presentations, we'll host a Q&A session, so please hold your questions until then. Our presenters today will be making forward-looking statements, which are subject to risks and uncertainties.
Actual results could differ materially from the statements made today. Additional information regarding risks and uncertainties that could influence our results can be found in documents filed regularly with the SEC. Unless otherwise noted, amounts referred to today will be on a continuing operations, constant dollar, and adjusted basis. Again, thank you so much for your participation in V.F. Fiscal 2025 Investor Day part two. I will now hand over to Bracken to get us started. Thank you.
Please welcome to the stage President and Chief Executive Officer Bracken Darrell.
Thank you. Oops. Music always comes on when I talk. Thank you, Allegra, and thanks so much to all of you for coming. This is really a thrill for me, and it's a thrill for all of us to talk about our brands, our customers, our products, and most of all, growth. You know, growth is what this team is all here. All this team in the front of the room here is all here for. So what we're here to talk about today is we're here to do to grow this company. Before I go further, I want you to imagine something for me. Just imagine a design company. I don't mean a fashion design company per se, but a design company. In this design company, principles of design are used to design the core products around the users to create really exceptional appeal. There's a deep consumer understanding.
There's a lot of imaginative hypothesizing, lots of testing and learning, learning of what to evolve and what to change. This design and redesign process never stops. But in this company, this test and learn approach doesn't stop at the product. It's done with the marketing too. New campaigns are imagined. They're tried. They're evolved. They're redesigned. In fact, this experimentation and design as a culture happens throughout the company, everywhere, in every function. That design company does not exist today. Now I'll mention another company, a multi-brand company like ours, but this one has identified and adopted the best practices in its industry for creating products, for sourcing, for everything, every process. But these practices don't stop at best in the industry. Once they're at the industry best level, they're always worked on, constantly improving, raising the bar continually.
Now imagine this focus on best practices covers not just processes, but it extends to the tools, the functional capabilities. They are also industry best. That company doesn't exist yet either. Now imagine a company that is both a design company like I described in the beginning and a scalable multi-brand company, like the second one I described. It uses design to create and improve everything, to put the user in the center. It experiments and tries things. It's profoundly creative, but creative with purpose, and it has and sustains the industry's best processes, but never stops improving them and never stops learning how to make them better, faster, more powerful. I want you to keep this combined mythical company in mind during the day and in the years ahead, because that's exactly what we're going to create at VF. Now let me get into the day.
I can hardly express how excited I am to be in this company at this particular moment. These brands are deeply embedded in the fabric of cultures all over the world, and all of them are so fertile with potential to be sparked, excited, and dramatically grown. That growth is what our aggressive transformation approach is all about and what you're going to hear about today. In October at part one of this event, we set expectations for the kind of business, the shape of the P&L we're going to be: a business with attractive gross margins and a strongly leverageable SG&A. The outcome we want is solid double-digit operating margins, even without growth. Growth will come, of course, but you can be assured it will be attractive, profitable, and sustainable growth. At that event, we highlighted three of the ways to grow.
First, our markets themselves are large and growing. The apparel and footwear market is expected to grow between 3% and 5% over the next four to five years. Second, we're all here to grow share, not just hold it. This will be enabled by an outstanding product creation engine and powerful marketing machine that together will deliver share growth. Third, we have lots of opportunities to expand into new categories and new products. We believe all of our products, all of our brands have the ability to use the strength of their core to expand beyond into new offerings. So long term, there is impressive growth ahead for all of our brands and growth potential for the entire company.
We also declared the types of brands we intend to have in this portfolio long term: powerful brands that are rooted in performance and also have the ability to build a following and lifestyle inspired by that performance. We believe that having performance at the heart of our brands is a competitive advantage because of the higher barriers to entry created, because of the time and investment required to establish credibility and performance, and this is an important distinction, pointed distinction relative to VF's past. We've done a lot of super important work in the early phase of this transformation, and now we understand who our consumer is for these brands, what products they need and want, and how to position our brands to meet those needs. Now we've got to run the play.
We've aligned our product, our distribution, and our marketing strategies, and you're going to hear more about some of those soon. Beyond this brand-specific content, you're going to hear from these brand presidents today. You're also going to start to get a feeling for the underlying system we're creating to enable those brands to grow and these brand presidents to be successful. It's not a cookie-cutter approach, but it is the result of industry-leading best practices applied to each brand in each process. And growth is not just going to come from what we do within each brand, but how we build those key capabilities that will enable us to leverage the multi-brand platform across VF and turn it into a competitive advantage. One of those pillars that is common across our portfolio is franchise management.
If you listen carefully today, you'll begin to hear not only about the iconic products we have, but also about our plans for how to rotate in and out of strong franchises. One of the amazing features of this unique collection of brands is that we have a lot of great franchises within them, silhouettes that have stood the test of time. For the number of brands we have, I suspect we have more strong franchises than any other company. That is an under-leveraged advantage. If we do it well, we will have an incredible platform of franchise to grow on top of. Now, before I say one more thing, I want to highlight how completely we've reinvented the VF leadership team. Including me, we have eight people at the top of the company who were not here and who were not in the company before I got here.
And all the rest on my leadership team are new to their roles. So it's actually a reality that we've changed every player at the top of VF either by role or by face in the last 18 months. Within those changes, one of our primary objectives today is for you to meet our brand presidents. I couldn't be more excited to have them as part of VF, and it's really a testament to how powerful our brands are. The strength of our brands has naturally attracted some of the best talent in this industry. You might remember the brand president role has evolved as a function of our new operating model. They do own the full business globally, but their focus is squarely where we create the greatest value: product creation and brand building.
This represents a significant shift in the skills needed for our brand presidents and has played a big part in why these particular people were chosen to run these particular brands. The five individuals you'll meet today have all been selected for their expertise in those two areas. I'm sure you're going to agree once you meet them that they are among the best people in this industry and really excellent choices to lead each brand they now own. I hope you'll walk out of here today with the answers to some of the questions on your mind about how we return to sustainable growth for the company and across each brand.
I know because I've talked to you, some of you are asking questions like, how does Timberland develop beyond the yellow boot and break through the $1.5-$1.9 billion barrier it seems to have that we've been vacillating between since VF bought it 10 years ago? Or how can The North Face become, and can we how big can The North Face become, and how can we elevate it while we grow it? Or can brands resonate with consumers in a broad way once again, beyond its core and reignite energy in its core icons while not over-relying and extending those too far? The answer to each of those questions is yes, yes, and yes. We know what the issues are, and we have the right people and actions in place to address those and a lot more. Okay, so who's with me today?
Some of these names and faces will be familiar, and others will be new. The leadership team is not all here today, so let me briefly outline the agenda and introduce the key players. After my short overview to describe what we're doing, Abhishek Dalmia, who you've met before, most of you have met before, will build on what he presented in October and help you understand how we're standardizing our processes and organization to enable scalable growth and functional excellence across the whole enterprise. Abhishek is uniquely made for this role. His role as strategy, Chief Strategy and Transformation Officer, plus digital and IT, and most recently, plus supply chain with Cameron Bailey's recent decision to retire after 25 years at VF. This last addition completely finishes rebuilding the leadership team. Just to remind you, Abhishek was a managing partner at BCG for seven years.
He won't tell you, but he was one of the top 10% for all seven of those years. The CEO of BCG told me that. He also spent time in the industry as an operator, including brands like Lululemon. And he helped me pick and choose which products to implement to bring us to best in class in each process area because he did those projects throughout our industry with the names that you know across the apparel and footwear industry. And that work will continue as we upgrade all of our major processes to best in class. Nina Flood will describe how we intend to scale this amazing Timberland brand so interwoven into popular culture and grow a business with the yellow boot and well beyond it. Nina has been with VF over 20 years and has deep experience with transformation, both on the brand and the business side.
Recently, she led the reinvention of our Packs business to become the strong, profitable, and growing business it is today. And you're starting to see her results in the reengineering of Timberland for the past two years, even though she's only been in the President role for one. She was GM before that. Caroline Brown will walk you through what we're doing to elevate and unlock the power of The North Face into significantly more growth. Caroline's ability to bring aesthetic power to a performance brand will be part of her magic, and this makes her uniquely suited for this role. She is a proven leader of multiple fashion and luxury brands, including roles as CEO of Donna Karan, CEO of DKNY, both from LVMH. She was the global President of Carolina Herrera.
She was CEO of Akris US, and she cut her teeth in this industry in this little brand called Giorgio Armani, where she was the leader in the US for marketing and communications. Caroline is truly a global citizen, an absolutely avid outdoors person, and a lover of The North Face, and any weekend, and sometimes on the weekdays, any weekend with her husband and on the weekdays with her team sometimes, you can find her somewhere on a mountain in the Rockies. She truly loves and lives this brand. Chris Goble is the most recently arrived among our brand presidents, and despite only being here a few months, he's already having a big impact, and you'll notice him wearing Dickies today. It's because of Chris. Today, he will share his very early vision on how we'll reorient Dickies to its core workwear heritage to drive a return to growth.
Chris came to us most recently from the Gap, where he helped engineer the turnaround of the brand as the Chief Product Officer globally for all of the Gap and the GM of the huge U.S. business. His unique experience with heritage brands, he also spent time at Levi's, by the way, makes him a perfect fit for Dickies. I asked Jen McLaren to come here today, and some of you have met her before, to talk to you about Altra, which might surprise you. But I did that because we have this unique asset with this massive potential. She'll tell you about how she is executing a strategy to build on the success of Altra and drive growth from the brand's core by leveraging its distinctively different product in this growing space of running. Jen's also been with VF for over 20 years.
Prior to Altra, she was with Timberland, and then she ran Smartwool. To round out the brands, Sun Choe will give you a summary of what we're doing to complete the turnaround at Vans and then turn it into a sustainable growth engine for women and the youthful lifeblood of this brand. Sun Choe ran product for Lululemon for seven years, where she created icons for women, entered deeply into men's apparel, and systematically created great products all along the way. Sun Choe will give you a summary of what we're doing to complete the turnaround at Vans, and she might not be able to help herself if you catch her on the side after from showing you a few of the coming attractions that we've got. I have to say, I know our Vans product all too well.
At the end of her presentation, I'm confident. I'm quite sure you'll think she was made for this job because I do. I think her entire career has led up to this job. Finally, Paul Vogel will come in after the brands to close out our presentation. Now, next, since Paul's going to cover this later, I'm not going to spend too much time reminding you today of what we've done, except to say a few things. First, we said we were going to cut our net debt. We've cut nearly 40% of our net debt if you exclude operating leases, which is about $2 billion. And as committed, we will bring our leverage ratio below the two and a half times target by fiscal 2028. We said that at the last investor meeting, and we will do it.
We certainly have no M&A plans near term because we have so much growth potential in our existing brands. But one day, we will likely go back and buy good brands and under-leveraged businesses, just as we did with Vans and The North Face years ago. And this platform we're creating is going to enable that. We're on track to cut $300 million of costs as we committed to much earlier. We said by the end of this fiscal year, we'd completely show up in the P&L in full. And we have actions, and we said this is the last investor day, that we'd be targeting another $500-$600 million of operating income expansion, and that is all underway. Paul will clarify this a little later, so I won't say another thing.
We reorganized that we committed to reorganizing the U.S. business, the Americas business, which has been in many ways our weakest business globally, and yet it's our largest. We did. We grew the business for the first time in the last two years, last quarter, well, there's still a lot of work to do. We are really on our way, and things are progressing according to plan. We have so much room to drive long-term growth in the Americas. You can now see the transformation of our leadership team in this front row, and if you look at our org chart, you can see how much we've changed. You can see the new faces at the top. What you can't see is how completely we are transforming both our structure and our processes throughout the company. We are radically changing the way this business operates.
We are zero-based. People use this term a lot. I don't use it loosely. We are zero-based creating the future organization, function by function, brand by brand, and upgrading our processes to best in class and standardizing them. We are reengineering the entire organization structure for effectiveness, which will give a corollary and added benefit of efficiency, but make no mistake, this is about effectiveness. It's about growth. We're adopting best in class processes as a standard way throughout the company in each area. This will happen over the years, and we're calling this the VF way. Take product creation. Previously, there were over 30 processes for creating products across our regions and brands, none of which were the best in class. The VF way now replaces these 30 ways of creating product with a single unified approach across the enterprise: one vocabulary, one process, one way.
We will then keep upgrading and improving that single approach based on new learning and new tools, and that'll be true for everything in the company. This exercise is being rolled out across the business. Now, let me head off a question I've gotten before that may have come into some of your minds just now. We are absolutely standardizing processes. We are not centralizing. And Abhishek's going to tell you a little more about that in a minute. This is the opposite of a consolidation move where more is run from the top. Our top is going to be thinned. In our world, almost everything can be run closer to the customer.
But this standardization will allow each brand president to be uniquely authentic to the rich history and strong capabilities of their brand while relying on the best in class and scalable process that is at the top of this industry. So where is this going to take us? Incredible and purposeful creativity, best in class functional excellence for our industry, and the best processes and tools. The creativity of a design company, purposeful creativity, and the execution of the best in fast-moving consumer goods. A unique kind of company in this industry. The combination of enhanced creativity, functional excellence, and standardized practices will flip the potential multi-brand disadvantage of a lack of unified focus to an advantage of broad and continuous applied learning. Just keep listening to us and watching throughout the day. And as the years click by, this is going to get exciting.
Now I'll invite Abhishek up to walk you through a little bit behind the VF way and the process upgrading I'm referring to before we bring the presidents up to talk about where they're taking their brands.
Please welcome to the stage Chief Strategy Transformation and Digital Officer Abhishek Dalmia.
Thank you, Bracken, and a warm welcome, everyone. I'm excited to be here and share more about our transformation. As Bracken mentioned earlier, I spent more than a decade at Dell and Lululemon, but the seven years that I spent at BCG gave me a unique opportunity to be very close to several large-scale transformations and growth initiatives across this industry. I learned a lot and built the right pattern recognition on what needs to be done and what needs to be avoided. One thing that I've learned for sure is that you can't just cut your way to strong, sustainable long-term growth. You need to also focus on building capabilities. Growth is at the center of our transformation. It's about elevating our products through bold design, innovation, and creative marketing.
This will be powered by a strong foundation of functional excellence and capabilities, and I'm thrilled for what lies ahead for VF. I want to start with a quick recap of what I shared during part one of our investor day. We covered our transformation journey, specifically how our nine reinvent workstreams are driving $500 million-$600 million in operating income improvement. First of all, we are on track to achieve this by fiscal 2028. But I want to underscore something important. This is not just about operating income expansion. It's about simplifying how we work. It's about building deep functional capabilities. It's about resetting the culture across the organization, a culture of consumer-centric innovation and design enabled by trusted collaboration and best-in-class practices. A key enabler of this change is the VFA, something Bracken touched on earlier.
You may be wondering why the VFA matters and how it accelerates our transformation. First, it is about driving improved performance. Our renewed leadership team brings a wealth of experience in what best-in-class looks like across the industry, especially in key functional areas. We are rapidly adapting these best practices and building functional capabilities to boost performance across our brands. Second, it is about freeing up capacity. A strong foundation of these capabilities lets our brands focus on what they do best, designing and innovating products and creating brand heat. And finally, it's about scaled impact. We are starting with one brand, one region, and then scaling rapidly across brands and geographies to unlock value. Clearly, the VFA isn't about centralization. It's truly about empowering our brands to reach their full potential. So let me bring this to life by giving some examples across three different areas.
First, let me take an example of brand positioning as an area of functional expertise. A strong, consistent methodology here can enable our brands to truly have a global scale, deeply understand the functional and emotional needs of our consumer, and understand the competitive and emerging market dynamics. So what was the problem with VF before? How we positioned our brands and our approach to consumer insights has been a challenge in the past. Every brand and regions within the brands had different approaches, which led to significantly high spend, confused positioning, and suboptimal outcomes. Worse, none of these processes followed industry best practice. Over the last 12 months, as part of our transformation, we have taken a different approach. Instead of a fragmented practice, we adopted one unified methodology across geographies.
We focused on a methodology that is rooted in drivers of purchase behavior, understood core consumer needs, evaluated competitors, and identified where each brand has a right to win. It allowed us to understand the market size and our potential headroom in each segment. These insights helped our brands develop a unified global brand positioning with regional nuances. This is now fueling design, innovation, marketing, and channel strategies. You will hear more about it from our brand presidents soon. Today, this capability supports existing brands. But in the future, this deep market and competitor insights could very well help us identify the right acquisition opportunities from a portfolio lens. Let me take an example of digital and technology acceleration. Having a strong digital and technology backbone can truly allow VF as a portfolio company to effectively scale its brands in a highly cost-efficient way.
In the past, we over-centralized this functional area, overbuilt internal teams, and operated with complex processes. This slowed us down significantly. Since then, we have rationalized our technology partners, optimized our mix of internal and external resources, and balanced onshore and offshore models. We started to work closer with our brands by creating small, targeted, cross-functional teams with clear brand objectives and decisioning power so that they could move faster and focus on business outcomes. The benefits: simplicity and speed. This increased speed of delivery is energizing our teams to continuously deploy new improvements. For example, in the last nine months, we have now upgraded the e-commerce platform of Timberland, The North Face, and Vans globally to a more modern platform. We have significantly elevated the design and user experience aligned to brands, target consumer, and future vision.
Simplified process is also helping us unlock capability to drive innovation with AI. You probably saw a video clip a little earlier. As an example, this is a recently launched AI shopping assistant on Vans.com. Imagine you are going to a music festival and want to get something with leopard prints to be on brand. You start interacting with the new AI agent and ask recommendations. The AI shopping assistant instantly suggested the shoes you should wear, helped you pick the size, and gave you outfit suggestions. It then allows you to seamlessly add to cart and checkout. This is just the initial version of one of the AI applications. AI is going to fundamentally change the way consumers shop, making interactions more seamless and frictionless, leading to engagement and conversion.
I can't share more details today, but I can tell you that we have some exciting things in the works right now, and because we have built the right foundation as the VFA, we can quickly scale these innovations across our brands, and finally, let me share how we are approaching the organizational effectiveness. While there was an opportunity to become leaner, this wasn't about reducing headcount only. It was about asking what work truly needs to be done and where. From there, we built the right structure to support it. For example, each brand historically had different organizational designs. Critical functions were often buried two or three layers deep, limiting their overall impact. Bracken has spoken about how important design is going to be as one of the key pillars of VF strategy.
Elevating design function and allowing our design talent the right seat at the table is extremely critical to our future. Through this transformation, we created a clear leadership blueprint, ensuring important functions like design and few others are elevated to report directly to brand presidents. This consistency through blueprint pushed teams to rethink how they will work stronger and better to drive product innovation and brand momentum. It is starting to unlock significant value, enhancing creativity and strengthening our functional talent pipeline for the future. The examples I've shared are just a few of the many actions we are taking as part of this transformation to drive brands back to growth. Let me wrap up by saying what Bracken mentioned earlier. We are here to unlock a new VF, one that empowers our brands by enhancing creativity, building functional excellence, and standardizing best processes to fuel long-term growth.
I will now hand over to our brand presidents. I'm truly energized with these exceptional leaders as they are at the heart of this transformation. Let me invite my friend and colleague, Nina Flood, to kick off the brand strategy session starting with Timberland. Thank you.
Mountainous landscapes in New Hampshire, the story of a bold boy.
Our crisp and chic stand the test of time.
Timberland, you know the name.
Timberland.
Who not unlocked by his father coaching?
It's more than just a bullpen. It's like a way of style.
It's a lifestyle as a movie.
Tim's gotta be with you. They certify with you.
Let's go.
And then she said, "Damn.
I knew I was life.
When you first put it on, it makes you feel like you made it.
This is Nigel's booth. It's deeper than that.
He put his hands on leather, and a yellow boot came off.
It's part of our DNA.
It's Lucas that gets a mind. I call it the yellow boot.
When you have something that's classic, it will stay forever.
Please welcome to the stage Timberland Global Brand President, Nina Flood.
So thanks, Abhishek. And good morning, everyone. In his intro, Bracken mentioned the number of new members on the VF leadership team. And while I'm new in role, I've been at VF for a long time in many roles, from marketing to strategy to general management to brand leadership. I'm passionate about building strong teams, driving growth, and I'm obsessed with steering brand transformation. My VF journey has taken me all over the world, from New York to Belgium to Switzerland, and now back to the US in New Hampshire. My time at Timberland started two years ago when I ran AMEA as general manager. This gave me perspective on the brand's strengths and opportunities and provided me with a running start when I took over as president at the end of 2023.
Knowing the brand so well gave me the confidence to quickly overhaul product and marketing, amplifying our iconic status and culture and better resonating with consumers, and today, partly from the work started when I was in AMEA, momentum has returned to the brand. We have noteworthy brand heat, and performance has begun to improve, but we're in the early innings with plenty of room for growth. Timberland really is an amazing brand with incredible reach. Everyone I talk to, especially here in New York, has a Timberland love story. Mine started when I was a little girl, when I'd watch my dad come in from work, kick off his well-worn boots, and head in for dinner. For me, I'd love to sneak over and put little toys in them for him to discover the next morning, which he always did.
Those boots, though, with their mud-caked soles and their fraying laces, were a symbol of hard work, resilience, and dedication. All of those attributes stand true today. This story and stories like it really speak to Timberland's enduring relevance, which is the first point I'll talk to today. Timberland is clearly rooted in an iconic product, but it is so much bigger than just one product. Timberland is deeply ingrained in culture and has a powerful emotional connection with consumers. In a world full of trademarks and brands, there are only a few that have been called love marks. Timberland is a love mark, even a love brand. One of the big questions likely on your mind today, as Bracken mentioned also, is how we're going to take this iconic brand and its iconic product and break through to the next level.
That brings me to my next point: how we're connecting this incredible brand love and heritage to a clear, ownable positioning with a deep understanding of our consumer, and how we're executing on this across product and marketplace. This is part of the framework that Abhishek just described that we're using across our brands. And this all leads to Timberland's strong growth potential. The changes we've made so far have returned momentum and heat to the brand, and we have a long runway for growth within and well beyond the boot across both footwear and apparel, especially in the Americas, where today we're deeply underpenetrated. Timberland is a powerful brand. It's well-known, highly regarded, and is resonating with consumers. And we're pursuing our strategy from a position of strength, which is an unbelievable place to be. So let's jump in Timberland's enduring cultural relevancy.
Timberland's story starts at the intersection of craft and innovation. Back in 1973, our founder, Nathan Swartz, set out to create the first fully waterproof leather boot that would protect workers in New England from the harsh weather. He famously tested his prototype by leaving it in the factory's toilet overnight, and it worked. As luck would have it, he crafted his sample from some unpopular leather in an unusual color, stamped a tree logo on the side of it, and the original yellow boot was born, and this boot, a crafted example of innovation, quickly transcended its original purpose. Over the next decades, it was adopted by culture, making its mark from the hip-hop scene in New York City to London raves to street fashion in Milan and Tokyo. For over 50 years, Timberland has lived at the intersection of heritage and culture.
It's a staple in closets, chosen for outdoor adventures, work sites, and city life, not to mention being embraced by top tastemakers and celebrities. Wearing Tim's is a point of pride for so many people around the world. There's a fundamental aspect of Timberland that transcends age, gender, ethnicity, and geography. It's a deep emotional connection. It's the unapologetic, bold reality of this badass, hardworking boot that transcends into the rest of the brand. This boldness is expressed differently across different cultures, but regardless of who, when, and where, Timberland always stands for unapologetic boldness and strength, and it's this unique element that creates a powerful sense of belonging: belonging to like-minded people, fellow workers, artists, or all-around badasses. It's what makes this brand so loved, so revered, and so often copied. However, in the past few years, Timberland hasn't consistently capitalized on this emotional trigger.
It hasn't clearly been articulating the power of this brand. Instead, it started chasing trends and straying from its core identity. The brand didn't consistently carry the strength of emotion into the product or communication. It didn't reinforce the why people love Timberland. As a result, the brand hasn't broken out to that next level. It all starts with deeply understanding why Timberland can evoke such emotion. Why has it been embraced by culture? Why would someone tattoo the sole of a Timberland shoe on their leg? Why did the New York Liberty team drop a pair of Tim's on the Aces home court as their symbolic flag after eliminating them from the finals? Why hasn't this brand reached its full potential? When I started in my new role, recapturing that why became a top priority.
It's interesting how you think you know something, but really getting it means you have to dig deeper. And we realized to unlock the power of this brand, we had to do some deep foundational brand work. But in the meantime, we could take some immediate steps to refocus on Timberland's powerful cultural connection. Beginning in early 2024, we made a choice. While we worked on the brand and the business, we would shift our communication and investment to focus on our icon. And we did it in a powerful way. The clear, consistent approach we took to our icon-focused strategy has made waves in the marketplace, and we've seen energy return to the brand. Successful partnerships like the Louis Vuitton collaboration and presence at Paris Fashion Week boosted brand visibility early in the year.
Our fall iconic ad campaign, which I'll talk to later, grabbed attention and had over 6 billion impressions. We've seen multi-month brand search growth in the U.S. and in key European markets. On StockX, whose mission is to provide access to the world's most coveted items, Timberland was the number three best-selling shoe brand, up 200% from 2023. And perhaps most exciting, we're attracting more young consumers. One of my favorite bits of feedback that we had was from a store manager who said, "The youngsters are coming in. They're breaking open their piggy banks, counting out the coins to get their first pair of Tim's." So exciting. According to Hice Nabeyebi, 2024 was an MVP year for Timberland, and this was highlighted by double-digit revenue growth versus last year in Q3 of fiscal 2025.
Keep in mind, we drove this turnaround by leaning into our heritage and DNA with intention, just the low-hanging fruit, and we still have a lot of growth ahead, so that brings me to my next point, sharpening our positioning. At the beginning of my tenure, we got deep into the brand work, and there's really an art and a science to it. We created an inspiring, globally aligned brand vision. That's the art, and we pressure-tested it through the lens of consumer demand, the science. Based on our brand strengths and our ability to meet consumer needs, we identified the space where we have the greatest opportunity to play and win, and as we execute our strategy, we're laser-focused on our consumers. Our consumers are style-forward people who love spending time outside. Whether in the city or nature, they just want to look good doing it.
They look for brands that make them feel noticed and bold. They want products that are expertly made and offer protection, not overly technical, but products that strengthen them against the elements and the world. From the trade worker to the student going into high school, they all want to feel stronger, tougher, bolder, to express the superhero inside. And over the past months, we've been focused here around this demand space and this consumer. And we've been reshaping our product, marketing, and marketplace strategies to meet their needs and amplify our brand power. And this is key to unlocking Timberland's full growth potential. To win with these style-forward consumers, we needed to clearly define our style aesthetic. This is something that the brand has struggled with in the past. The screen behind me shows a glimpse of our seasonal inspiration room.
We created this space to bring to life our product promise, which is to deliver crafted, weather-ready style. We also use this space to visualize our unique points of differentiation that make us stand out in the marketplace. One of those key points is craftsmanship, which, along with innovation, is deeply rooted in our DNA. And today, we're amping this up. One way we're doing it is by increasing the output from our in-house makerspace, which we call the shed. Our designers are in there, handcrafting prototypes and trying out new techniques. They're also building exclusive leather products for athletes and celebrities. Their creations inspire our mainline with craft, innovation, and style. Overall, our product assortment strategy is focused on growing within and beyond our core footwear and unlocking the potential of apparel. The six-inch boot clearly sits at the center. It's a street-style must-have and an undisputed footwear icon.
This year, we'll continue to celebrate it with new colors, materials, and collaborations that drive sales and fuel brand heat. Sales of the boot have not yet hit. They aren't even close to their historical peak. Today, with cleaner distribution and stronger segmentation, we have a lot of runway for healthy growth in the boot itself. We're cultivating other styles and emerging volume drivers through smart franchise management. Shoes like our Three Eyed Boat and Euro Hiker are poised to be future icons. Here, we're broadening reach with multi-season offerings and exciting energy projects. Our goal in footwear is to reclaim our position in leather leadership, innovate on comfort, fit, and weather readiness, and always be unapologetically bold and uncompromisingly crafted. For apparel, it's a smaller part of our business today with tremendous opportunity. Here, we're redesigning our line, translating our heritage into crafted, weather-ready style.
We're introducing more transitional items for year-round appeal, and we're streamlining our offer for greater impact, positioning ourselves as a destination for categories like outerwear and denim. So you might ask, why would Timberland focus on denim? I would say, why wouldn't we? Denim is the uniform for the Timberland boot wearer. And looking forward, we'll be offering denim jeans, jackets, and shirts that are just as bold as our boots. In marketing and brand communications, it's all about igniting that emotional connection. Our consumers want to feel bold and noticed, and this is where we thrive. Timberland ignites kick-ass energy, helping our consumers stand tall and unapologetically leave their mark. And you could see this come to life in our marketing. Here, our strategy centers around building on this emotional trigger with bold, impactful, consistent messaging and amplification of organic engagement and culture.
Our recent Iconic campaign really resonated with consumers. The campaign featured the truly iconic, our boot, and people like Kai, Slawn, Teddy Swims, and Naomi Campbell, who stripped down to only the yellow boot, literally. In the past, we had many splintered stories that just didn't gain traction. Now we are communicating with a unified, powerful, global voice, and consumers are paying attention. This brand has an authentic connection to culture, helping us generate tremendous organic attention without our prompting. And frankly, we haven't been capitalizing enough on this. We have a lot of VIPs that reach out to us for custom products for major events like the Grammys, NBA All-Star Games, and Coachella, like you see here with Doja Cat. Today, our modern marketing approach leverages this organic impact by amplifying it in our social channels. As a result, the landscape feels like one wave of energy for Timberland.
We're really just getting started. We have a clear vision, unique products, and noteworthy brand heat. In the largest market in the world where the brand is strongest, we've barely begun to tap into this. In the U.S., we can reshape how our brand connects with consumers because historically, it's been more about transactions than real engagement. Starting with e-comm, we revamped our U.S. website last fall, right before launching the Iconic ad campaign. It's already paying off with positive comps and better margin. In terms of bricks and mortar, today, we have only nine full-price stores in the U.S. If I asked anyone in this room, where would you go to buy your next pair of Tim's? If you didn't live in New York, where three of the nine stores are located, you'd be hard-pressed to answer.
Yet the interest for Timberland is huge and growing. Imagine what a barrier that is for the brand, so you can bet. We'll be systematically opening smart store formats in key cities, but we'll do it wisely informed by data. We aren't looking for anything but profitable growth, and we have a clear plan to execute. As I mentioned earlier, we're driving our strategy from a position of brand strength. Timberland has incredible staying power and an authentic connection to culture and enduring relevance. Honestly, you can't buy that kind of connection. We've done the work, the art, and the science. Today, we have a compelling vision aligned with our rich heritage and DNA, and it's grounded in a deep understanding of our consumer, and we have room to grow.
We simply aren't as large as we should be based on the vast amount of love consumers have for this brand. We have a clear and focused plan to execute. We're cultivating the deep, authentic connection we have with consumers. We're amplifying our cultural relevancy. We're growing in and beyond core footwear. We're unlocking the potential of apparel with our unique style aesthetic. We're executing in the marketplace, and we will reshape how the brand comes to life in the US. And finally, we're unapologetically igniting the badass energy that embodies the Timberland brand. So with that, thank you for your time. Now I'll pass the word to Caroline Brown from The North Face.
Out here, out here. We play differently. Out here, we don't play games. We don't play with whistles or referees. We play with adrenaline and euphoria. We play a rough house with failure.
We play hard to get with boring. We play chickens with gravity. We don't play games out here.
Please welcome to the stage the The North Face Global Brand President, Caroline Brown.
Good morning. It's great to be here to share an update on our plans for The North Face. Let me start with a quick introduction on myself. I joined The North Face in June of last year as Global President after many years in the fashion industry and most recently from the Board of Directors at VF. Prior to this role, I spent over three decades in this sector and have worked in pretty much every area of the business, starting on retail sales floors, store management, brand building, creative, and marketing before leading several businesses as Global CEO.
In these roles, I have led turnarounds, repositions, and sales of large companies through building new leadership teams, new strategies, brand and marketplace repositioning, and new product platforms. But most importantly, I've had the opportunity to work with some incredible people and to be a part of some great teams. I've led teams around the globe with products selling in over 100 countries, and I have a deep appreciation for global nuance and for the complexities of scale. But first and foremost, I'm passionate about people. I'm passionate about building great teams, and I'm passionate about growth. Given my background leading luxury companies, I'm frequently asked if we plan to turn The North Face into a fashion or luxury brand. This is very easy to answer. Absolutely not. The North Face is so much more.
But there are some aspects of these segments that are applicable here, and we will take advantage of those. We can be a performance company and also have beautifully designed and elevated products. We can extend our range of products and price points while still offering the core collections that we are known for. We can be aspirational in marketing and in the marketplace and still reach a very broad consumer base. We haven't always done these things consistently in the past. We certainly can, and we will. But at its core, The North Face is and always will be a brand that protects athletes in the most extreme conditions. It has proven itself over and over on the harshest peaks on earth, and it delivers performance when it matters. It is full of grit and toughness. It is much more than just the products we make.
The North Face is a mindset. We are a brand built for exploration. And it's that heritage that we will stay true to and grow from there. I am truly passionate about the North Face. I also know this brand personally. I've worn it high in the mountains where performance really matters and just as comfortably on these streets right here in New York. I know firsthand its extraordinary range. And I believe this is one of the strongest brands in the world with our best still lying ahead. I'm joined on this journey by an outstanding team who share the same passion for this brand and for its future. We have brought together a new senior leadership team of incredible leaders from different backgrounds, geographies, and experiences, all equally inspired by the brand.
The members of this team have both long and short tenures at The North Face with experience from leading companies. It is truly a privilege to be a part of this team. So before we get to where we're heading, let's take a minute on where we came from. The North Face will turn 60 next year. Launched in 1966, born on a mountain and from a small shop in San Francisco with a mission to share a passion for the outdoors. Many people don't know this, but the Grateful Dead performed at the opening party. Hell's Angels were the bouncers. Joan Baez attended, and a culture was born, one of grit, love of wild things, love of nature, and exploration in all its forms. This brand has been a part of culture from day one.
Growing from these roots, The North Face today is the largest outdoor brand in the world with over 7,000 points of distribution, over 6,000 employees, and producing over 80 million products per year. But looking ahead, our ambitions are far bigger. Our brand is strong. It can be even larger, and we are moving quickly to set ourselves up for that growth. Today, we will cover some of the steps we are taking to make this happen across consumer, product, marketing, marketplace, culture, and operations. So let's dive in, starting with the consumer. The North Face has always reached a very broad audience, and we remain committed to that, primarily by serving two consumer segments: the true performance consumer and the lifestyle consumer inspired by that performance. The true performance consumer is characterized by an alpinist, the obsessed athlete, the extreme trail runner, the climber.
These are the athletes pushing the edge of human performance. I can't emphasize enough how deeply embedded athletes of the outdoor world are in our brand. But we also have another segment of our business, and it's a very significant one, and that is performance-inspired. These consumers are motivated by the spirit of adventure, identify with the emotion more than the activity while still aligning to the personality of Never Stop Exploring. They appreciate The North Face for everyday wear on their city streets. This reach from one extreme to another is rare, and it is one of our biggest assets. We have a solid foothold on both edges of this brand, and it is this balance that makes us the biggest, yet still offers room to grow. Between these edges lives a robust middle market that is driven by both sides.
We are looking to grow these segments, which have an addressable market of over $200 billion. Moving on to product, let's start with apparel. First and foremost, our ambition is to double the size of our apparel business today, which is the majority of our revenue. The first change we have made is a reorganization of our product teams from three dispersed teams to one clear global center. As a part of this change, we have also elevated each of the product centers of design, merchandising, and development to our leadership team. They are joined there by product planning and innovation leads as well. In the past, our organizational structure did not allow these teams to be at their best. Now they can. In addition to this, we are driving five significant product shifts.
First, we are strategically editing our product platform from over 20 categories to three: snow, climb, and trail. These three segments are where we are at our best, true to our origins, and what the consumer wants from us. All three also appeal to both a performance and a performance-inspired consumer. This edited approach moves us from several brand-dilutive categories with little or no significant return and frees up resources to drive growth in more productive areas. It also allows us to deliver leading product with a significant upside in addressable markets where we can truly win, driving clarity for our consumers and marketplace distinction. Second, we are elevating all areas of product. This includes elevating design, increasing our price-to-value relationship, raising the level of our materials and components, and raising quality. Third, we have established a new line architecture to serve the consumer with a full head-to-toe collection.
Today, we are leaders in outerwear, and a majority of our offering lives in this classification. Our new line architecture includes the tops, the bottoms, the layers, and the accessories to accompany this. Our consumer wants to buy more from The North Face, and we will make sure to offer that. Fourth, our product teams are building a new creative design language that will be instantly recognizable. We are pulling in signature visual components from our heritage, the iconic The North Face color blocking and design lines we are known for, hardware inspired by mountain gear, recognizable silhouettes, so everything we make will have a uniquely The North Face signature. And finally, our fifth change is to sharpen our product franchise management. We are really fortunate at The North Face to have seven established icons, four of which live in our apparel category and have formed the foundation of our growth to date.
These include our Nuptse Jacket, our Mountain Jacket, our Denali Fleece, and our Himalayan Parka. All have performance credibility in the outdoors and street credibility as a part of city culture around the globe. We are actively working to expand these franchises further, and we are currently remastering them for upcoming seasons and continuing to push innovation and design elevation for each one. With the established icons in place, we are also working to build new franchises for the future, securing important growth levers for years to come. Outside of apparel, we are also growing our equipment and bag business and have an ambition to double this as well. Today, we have a strong penetration of the backpack market and are delivering a best-in-class product, but we can go even further.
Like apparel, our bags will now follow the same recognizable design language unique to The North Face and the edited merchandising focus of snow, climb, and trail. Our equipment category is already a leader in the outdoor space with a history reaching back to this geodesic tent that combines recognizable industrial design, incredible lightness, and unmatched performance. Today, our equipment team is pushing even further to become the leader in groundbreaking universal design, which will allow people of all abilities to enjoy the outdoors. And finally, you have heard The North Face talk about prioritizing footwear in the past, and it's working. We are experiencing very strong momentum here. Emerging franchises like the Verito, the Glencliff, and the Off Trail continue to drive excitement in our markets and gain traction at retail.
On the performance side, our footwear is now appearing on winning podiums at the most grueling trail races and ice walls across the globe. On the performance-inspired side, we are appearing more and more on busy city streets with products such as our signature down slippers that have now moved from performance into the mainstream. Given the steps we are taking to strengthen footwear in design, innovation, and distribution, we see a pathway to triple the size of this category. All of this work on product will be based upon a platform of solution-led innovation, which we will continue to prioritize as a foundational pillar of the brand. Today, we hold IP for Pinnacle Technologies that can keep an athlete protected in the harshest of conditions. In extreme environments, an innovative material can be the lifesaving difference.
We plan to further fuel innovation with a key focus on three areas: elements protection, moisture management, and movement enhancement to keep our explorers protected, comfortable, and at their peak performance. Turning our attention to marketing, we are putting more power behind this brand through modernizing our platforms and investing in a completely new way, enabling deeper consumer connections. Let's take a look at the 40th anniversary of our iconic Mountain Jacket, which just launched last week. This campaign is designed to blend authentic mountaineering history with relevancy for today's consumer. It's visible online in stores across all digital channels with both brand and user-generated content heavily focused on influencers and social channels. The platform shows the jacket in an unexpected way on a young British pop star juxtaposed to serious climbers and city influencers alike with a 360-degree consumer experience.
Early results of this strategy have delivered over 200% ahead of our D to C plan. Additionally, in marketing, we will be doubling down on our athlete team. We are really proud of this team. No one has an athlete team like ours, fully integrated into the brand, engaged, and involved. They test our innovations in extreme conditions. They work with our technical designers, and they bring the North Face to the harshest places on the planet. They inspire us internally every day, and we are going to bring these experiences to life in our stores and on our digital platforms in a completely new way. Our athletes are at the very heart of who we are, and we will make this more visible. And finally, in marketing, we will continue with select collaborations on a limited basis, driving brand heat and engaging new consumers.
Take our recent collaboration between The North Face and Skims. This limited-edition ski collection was designed to marry performance with lifestyle. That campaign was shot on leading The North Face athletes and catered to celebrities and influencers alike. It appeared visibly throughout cities from New York to Shanghai. User-generated content engaged major influencers, celebrities, and a worldwide dialogue on social channels. The results show the power of this influencer-focused strategy with over 10 billion impressions and selling out in all key markets in a matter of hours. Equally important, this collaboration shows the demand for product from The North Face that combines performance and style in a new way for women. Lots more opportunity as we develop this further as well. All we have covered today needs to reach the consumer through a brand-right marketplace, and we are moving fast to make changes there as well.
We are working to ensure that our stores are designed with a consistent brand message, testing new concepts, accelerating refurbishments, and new retail locations. We continue to expand our footprint through both owned and partner store growth globally. We are testing new category concepts and opening new flagships in New York and Shanghai this year, joining our recently remodeled flagship on Regent Street in London. On the digital front, we will be featuring more dynamic content and leaning into the work on digital enhancement with AI tools across all of the VF Finally, all of this work is enabled by the strong connections of teams and the many talented associates we have around the globe. We are strengthening our culture and operations. This includes a recent realignment of our teams around the world to enhance our commercial platform for growth.
From VF, we are leveraging the strength of our portfolio to take advantage of more effective technologies and standardization of core processes, which will help free up space and time to push creative further. We are now using the full scale of the group for supply chain negotiation and margin enhancement. All of these deliver us an outsized competitive advantage as we look to the future. In closing, here are some key takeaways from today. Number one on product: 2x apparel, 2x equipment, 3x footwear. We are building pathways for significant growth in every one of our product categories. We will elevate, innovate, and create product in a new way. On brand, we are putting more power behind this brand and building consistent execution across all consumer touchpoints and investing in a completely new way.
On culture and operations, we are strengthening our culture and operational core with our new global leadership team, organizational realignments across the globe, and leveraging VF scale for competitive advantage. Thank you for the opportunity to speak with you today, and now I will hand it off to Chris Goble to talk about Dickies.
We wear our work day by day, stitch by stitch. At Dickies, we believe work is what we're made of. You can see it in our faces, in the creases of our hands. It can choose us, or we can choose it. What matters isn't what we do. It's how we do it.
Please welcome to the stage Dickies Global Brand President, Chris Goble. Good morning, and thank you for your time today.
It's an incredible privilege to work for VF Corporation under Bracken's leadership, and I'm honored to serve as the next steward of Dickies, an iconic American workwear brand that has stood the test of time and now entering its 103rd year of operation. I'd like to structure our discussion in three parts. First, a brief overview of my background. Second, a quick refresher on the Dickies brand and market opportunities. And lastly, an introduction to a playbook for brand turnarounds built off my past experience and recognizes the opportunity here at Dickies. So to kick it off, I grew up in West Lafayette, Indiana, a small college town in the Midwest, the heartland of America's workforce. My father was a farmer, turned college graduate, then businessman, and he instilled a blue-collar mentality towards work into our family. And my mother immigrated to the United States from Panama City, Panama.
She came here to study art in college. She's an artist in the truest sense, and that's where they met. And luckily for me, my mother passed along her aesthetic sensibilities and an outsider's perspective. I went on to Purdue University, graduating with a degree in liberal arts, and worked part-time jobs in college. And my career has taken me through four pivotal stops with valuable lessons in brand management along the way. At American Eagle Outfitters, I learned the importance of consumer obsession. We studied and engaged our 18-24-year-old consumer through campus visits and events, emphasizing the principle, "Know them to serve them." At Levi's, I gained a deep appreciation for brand and product-led growth. Levi's success over 150 years comes from their ability to innovate against their core competency and staying true to their roots. And at Old Navy, I developed operational discipline and rigor.
With the size and scale of a business like that, every operational improvement, no matter how small, made a significant impact. And finally, at Gap, as a global chief product officer and general manager for the North America business, we helped turn around a declining brand. I believe Gap has now achieved eight consecutive quarters of market share growth. Which brings me to Dickies and what an incredible opportunity we have here with Dickies. Similar to the other brands I've had the privilege to work for, Dickies is another iconic American brand. Dickies has been creating quality workwear since 1922, with four generations of the Williamson Dickey family helping guide it along the way. We started with workwear for the American worker, manufacturing and selling high-quality overalls and pants, and we continued with the match-set uniform after World War II through the 1950s.
We then expanded into casual wear for college kids and America's future workers in the 1960s. Eventually, we expanded into further casual trends with dyed painter pants in the 1980s. Then through the 1990s and 2000s, Dickies workwear was adopted by popular and urban culture: skaters, musicians, those that shared our values of hard work and love for functional design. That all led to the acquisition by VF in 2017. And after a few years of declining sales, we're here today to share our strategic reset. Similar to the other brands in the VF portfolio, Dickies was born out of functional needs: performance, solving unmet needs in the marketplace to provide workwear solutions for the working class. Unfortunately, we lost our obsession with work and shifted too quickly into lifestyle. Moving forward, we will lead with work and putting workers at the center of every decision.
This simple framework shows how performance and the lifestyle side of the business work together to strengthen our brand positioning in workwear. On the left side, you have performance workwear. This is where functionality and innovation is key to driving solutions for today's workers, and on the right side, you have lifestyle workwear. This is where style and relevance is key to driving a lifestyle adoption of a workwear aesthetic. Each side is anchored in our DNA, our brand codes, and the authenticity which Dickies workwear is known by. Dickies is a globally distributed brand showing up in 55 countries throughout the world, and we have a distinct positioning that allows us to serve consumers from value all the way to premium, and we have three specific types of consumers we're looking to serve. First, our work consumer. This is the essential core of our brand.
These consumers are seeking workwear solutions to enhance their job performance. Attributes like durability, comfort, protection are just a few examples of the types of solutions to service their needs. Second is our value consumer, where price accessibility is a critical factor in their purchasing decision. We serve this consumer with our genuine Dickies sub-brand, which is a different label and shows up primarily at Walmart and other value retailers. Fun fact, did you know that the Dickies brand was carried in the very first Walmart that opened in 1962? Dickies himself decided to enter after many discussions with his friend, Sam Walton, because he was convinced that Walmart consumers wanted Dickies. But quite frankly, we lost our focus on the importance of serving the Walmart customers. And we all know that they stretch well beyond the value customer today. It's a massive opportunity as we go forward.
Last is the lifestyle consumer. These consumers love what workwear brands stand for, or they simply gravitate towards utilitarian design as their style preference. You could also call these work-inspired lifestyle consumers. We have premium distribution across the world, whether that's at Dover Street Market or Nordstrom or End in Milan to Isetan in Tokyo. Workwear, and specifically Dickies workwear, is coveted at every distribution point across the lifestyle spectrum. As we zoom out, Dickies plays in very favorable macro trends that we are very excited with a 103-year-old workwear brand. On the work side, we're seeing trade school enrollments rise as the cost of traditional universities has been challenging for a lot of people. With GenAI and other technologies disrupting white-collar jobs, blue-collar jobs, and the skills needed are as important as ever. Many are calling this the new-collar boom.
And on the lifestyle side, workwear has cemented itself as the go-to style preference for those seeking utilitarian design. We're seeing a trend in the items that stand the test of time. Workwear is inherently the opposite of fast fashion. It's built to last. Now I'm going to walk you through our playbook to turn around this brand and restore it to growth. We have always been a purpose-driven brand. We champion the passion, the pride, and the power of work. And as I mentioned earlier, we will get back to that obsession with work to regain our leadership in workwear. Our product architecture has been quite fragmented across our geographies and distribution channels. This doesn't afford us the benefits of scale or product conviction across our value chain. We will get disciplined with global franchise management to unlock our product engine.
And once we have that product engine firing, we will be better suited to drive global big ideas through the marketplace. We will lead with creative conviction by deploying modern marketing to drive brand heat and relevance. And as we discussed earlier, we have three distinct consumer segments, which we will be able to have a deliberate execution across our channels and geographies. Similar to the other VF brands, we have a collection of iconic products that we're famous for. They're often imitated, but never replicated. The coverall, the bib overall, the legendary 874 pant, our work shirt, and the Eisenhower jacket. And if you're a brand geek like me, getting the opportunity to leverage an incredible archive for future growth is an absolute dream come true.
I'd like to take you through just one simple example of how we will use design-led innovation and grow our icons' relevance season over season. Let's start with our Eisenhower jacket, one of our most iconic items that was created for the U.S. Army during the latter stages of World War II and named after Dwight D. Eisenhower. This silhouette remained very popular after the war because of its versatility. However, to continue to make it relevant for today's consumer, we need to modernize it with design-led innovation. But what does design-led mean? The core function of design is to identify and creatively solve issues or friction points. We identify these friction points through consumer insights with our core work segment or through trend and market insights to satisfy our lifestyle segment needs.
For example, as casual wear continues to grow at the expense of more formal wear, denim continues to grow. Did you know that the first product that Dickies ever sold 103 years ago was denim? Denim is one of the original workwear canvases. Here, we could take our Eisenhower jacket and change its fabrication to denim. We could also expand the reach of this jacket with a cold-weather solution and make an insulated version. We could change the proportion, the silhouette, the print, or even graphic to make it more relevant. We need better storytelling and a balanced approach across the full funnel. We will enable modern marketing to complement our brand narratives to drive brand heat and relevance. This starts with a global big idea framework enabled by franchise management across the performance and lifestyle spectrum of workwear. These brands are differentiated through creativity.
Creative confidence in product and marketing will set us apart, so just a few months into the role, Bracken asked me to introduce myself and give you a small taste of a proven playbook that we're deploying to execute this turnaround. We will obsess work, putting workers at the center of every decision, using their insights to drive design-led innovation, and unleashing our creative conviction in the marketplace with big ideas executed with modern marketing. I'm excited about the Dickies brand and the value creation opportunities as we go forward, and I look forward to seeing you again, and hopefully, I'll be seeing you wearing Dickies.
Every day I go think for myself, I go think for myself, I do. Do me, do me, I do, 'cause I wouldn't be me if I did it like you.
I know the world is cold, it's cool, but I thick skin on me like a polar suit. Dark fruit, sweetest juice, done with the ties, with the armor suit. Just another day, another day with the gang, gang, with the family come first, we plot and we plan, plan. I couldn't tell you what my smoke was at, reflections in the wall, put a memory back, but I been there, done that, done with it, had to bust a new trend while the world keeps spinning. Big bag looking like a Phantom, X-Rex collecting, can the band get sampled?
All right, now I'm going to pass it to Jen McLaren with Altra.
Please welcome to the stage Altra Global Brand President, Jen McLaren.
Hi everyone, I'm thrilled to be here today and share my excitement for the brand and our growth opportunities.
But before we jump in, let me share a little about my background. As Bracken said, like Nina, I've been with VF for 20 plus years. I started at Timberland, and then I went to Smartwool, and the last two years I've been leading Altra, my third VF brand. Prior to Altra, I was a Smartwool brand president, and I helped the brand break into apparel. My passion and expertise is building and growing newer brands in the active and outdoor space. I've learned a lot over the years, being part of a more entrepreneurial brand culture. You can move fast, and you can stay close to your consumer. But one of the learnings I've had with growing brands at this early stage, which is also true of more established brands, is that you must grow from your core and stay authentic to why your brand was founded.
So you'll hear me talk about how we're taking these learnings into our growth strategy at Altra. I love loyal brands that have a unique purpose and DNA with a loyal following. These qualities provide a significant opportunity to grow. Altra has those characteristics and that growth opportunity. In addition to this brand uniqueness, we play in a market with strong tailwinds. So our unique points of difference for runners have even more potential to propel strong growth. One of the most exciting things about this business is just how loyal and avid our users are, yet how low our overall brand awareness is. You've seen this story before in the running space, and we have seen several brands break through. We have that kind of potential here.
At Altra, you either know us and love us, or you don't know us at all, but once you try our shoes, you are hooked. I had the same experience with the brand a few years ago. I love to hike and trail run. I live in a Colorado mountain town, and once I tried our trail shoes, it was a game changer for me, and I'm a stronger runner now for it. I absolutely love this brand, so let me take a minute to share with you our founder story and why Altra. Altra was founded by Golden and Brian, two cross-country teammates, as they worked at Runner's Corner, a run specialty store owned by Golden's family in Utah.
They were looking for a shoe that allowed them to run naturally, a shoe that gives you room for your toes and a more natural stance with zero to low drop. Ultimately, the solution they were looking for allowed for a natural running style that studies show helps strengthen your feet. And research also shows that stronger feet play a key role in helping to prevent injuries. But they didn't set out to create a new brand. In fact, they asked other brands to make the shoes they were looking for, but the brand said no. So they started making their own shoes, using a cobbler and using toaster ovens. And in 2011, the brand was born based on the promise that Altra helps keep you running by allowing you to run naturally.
A brand with a unique offering, a shoe distinctly different than the rest of the market, they adopted this challenger brand mindset, which we still lead through today. Historically, Altra has held a leadership position in trail and focused on the U.S. market. And so while we continue to lead from our core, we remain underpenetrated in the market and have significant room to grow. So let's talk about those growth strategies. We're investing against our top three priorities: product, building brand awareness, and managing the marketplace thoughtfully by leaning in with specialty partners. So let me share a little bit about each strategy, and then we'll show some examples. Our first priority, as I mentioned, is product. Elevating design and innovation while delivering on our brand promise for runners, we're investing significantly in the product team and innovation.
We're focused on elevating our fit, feel, and comfort for trail, road, and leading with women. And I'll talk more about this in just a minute. Our second priority is marketing, building a beloved brand by investing in awareness and spreading word of mouth. The run consumer is evolving and leading into approachable health and wellness. In addition, younger consumers are looking for authentic brands within real-life engagement. Run clubs are the new social club, and women's sports are significantly gaining in popularity. So I'll share some examples of how we're leaning into these trends and creating that emotional connection to our brand. Our third priority is marketplace strategy, leaning in with our best brand partners in the marketplace. Most of our efforts are focused in the U.S., but this is a brand with significant opportunity in Europe and Asia as well.
We are beginning to build brand awareness and visibility in these markets, in addition to deepening our presence in our home market, of course. Here's a picture of our first monobrand partner store opened this month in Tokyo during the Tokyo Marathon. We're very excited to have great representation in such an influential market. Let's go a little deeper on each of these priorities. First, let's focus on product. Wearing Altra shoes is a better way to run. It was first of its kind, and we believe that it's the best, and here's why. With our unique point of difference with room for your toes and a zero to low drop, we can lead with our best in class fit. It allows for a better running style that provides more balance and a stronger stance as your body is moving naturally.
Runners try it, and they love it. We hear time and again about how people try our shoes and don't want to go back to an uncomfortable narrow shoe. Or we hear how our shoes have been transformative in getting them back to running because we allow people's feet to move naturally, leading to stronger feet, a key factor in helping to prevent injuries. We're also, though, elevating our designs and our color strategy by offering more everyday colors and sophisticated designs. We're seeing our key heritage styles growing 50% year over year with these improvements. We have three category choices we're focused on: own the trail, win the road, lead with women. Growing from our core while unlocking the bigger opportunities in road and women.
For context, in the athletic specialty sporting goods channels, one of the channels where we play, we are number two in trail, although a small market of roughly 300 million, while we're number eight in road in a market of 2.9 billion, and currently, our business is split between trail and road, but are growing the fastest in road. In the future, we expect to be weighted more towards road with at least 70% of our business in this category. We also have significant opportunity to win with women. We're now leading our product creation process with her by elevating design, color, and a women's specific fit, so while product is first, building awareness is another key to unlock even more potential and growth for this brand, so let's talk about that. As I mentioned, our goal is to grow awareness.
Here are two examples of how we're leaning into cultural trends to break through. On the left side, you can see one of our athletes, Tara Dower, who had an amazing trailblazing moment last fall. She achieved the fastest known time on the Appalachian Trail, running on average 54 miles for 40 plus days straight. We broke through on mainstream media by amplifying Tara's story with over a billion impressions and influencing girls everywhere to participate in the sport of trail running. And while trail is what we are known for, as I mentioned earlier, we see significant opportunity in the road category. To the right, you see a picture of Cool Down Running, one of the largest run clubs in the U.S., of which we are title sponsor. And this is such a great way to spread awareness for the brand.
So moving into our third priority, we must grow from the core and manage our marketplace strategically. Specialty retail is at the heart of our industry. They are the experts in the sport and their run community, and we're investing in our key partners through marketing, supporting driving traffic into their stores, and most importantly, doubling our field service team, training floor staff on Altra. As an example, here's our team pumping up runners at the Marine Corps Marathon in Washington, D.C. We're proud sponsors, along with Pacers Running, a marquee run specialty retailer and one of our best partners. We're also investing in displays and in-store storytelling at retail as a key player in the space. So we're committed to this important channel for decades to come.
So in summary, this is a $200 million business built on the back of our point of difference and primarily word of mouth. Product is our top priority, and we have enhanced the team and have a clear growth strategy to pursue trail, road, and with women. We also have a great opportunity to build awareness, which is less than 10% today. And most of our awareness has been organic to date, and we are investing strategically here, and it's working. We're a leader in trail and growing the fastest on road as our point of difference is breaking through. And while we are focused on solutions for running, our points of difference with the best in class fit are a solution for everyone. We're excited by the future and the opportunity ahead.
With investment behind the brand, we will achieve the vision set out by our founders to change the shape of running globally and take the Altra brand to the next level. Finally, we have a talented team who are not afraid to do things differently. Let me leave you with this brand video showing this challenger mindset of our team and our brand.
The Appalachian Trail, 2,197 mi, faster than anyone ever. You just impressed the entire universe.
Most people thought that old record, it was unbeatable.
Having a conversation with Christy, she was asking, like, how do you define community? And then we rushed to the finish, and we kind of looked at each other and we're like, connection. Magic. This.
So thank you for the time, and now we'll hand over to Sun to talk about Vans.
Please welcome to the stage, Vans' Global Brand President, Sun Choe.
My career trajectory sounds really linear and logical and strategic. As I recall, it was anything but. It felt more like Mr. Toad's wild ride. That's a little shout-out to Anaheim. Hi, everyone. I'm excited to be here and to give you an update on where we are with Vans and to elaborate on my vision for the future of this great American brand. I also want to introduce myself and share how Vans has been a major part of my mojo for the better part of my life. The polishing of high adulting you see in front of you is overlay. Underneath lies the beating heart of a Vans girl, fangirl from way back when in Reagan America. As the only Asian kid growing up in the preppy monoculture of suburban Maryland, I really didn't fit in. Worse, I stood out.
I also carried the burden of expectations and aspirations set by the Korean community, which for sure included my parents. I was supposed to conform, excel, and make safe, responsible choices, like pursuing molecular biology or petroleum engineering. That path was a non-starter. The only gap in the wall of convention I could find, the only haven I could ferret out for the lovable malcontents such as myself, was a hardcore punk rock subculture of D.C. They were the only people that would have me. Thank God for the Bad Brains, the bands on Dischord, and any act that blew through the district and played the 9:30 Club. This is where I fell in love with self-expression through DIY streetwear, which of course included Vans. Before e-commerce, San Francisco was a cauldron of brick-and-mortar stores when I moved there for my first job.
In many ways, the zeitgeist of the '90s was a reverb of the '70s, and to a freshly arrived Easterner, nothing embodied that renegade, free-spirited California vibe more than the skaters weaving up and down the Haight around the Embarcadero Center or under the shadow of any overpass. All across the city, from Outer Sunset to Emeryville to edgier parts of Oakland, skaters of all ages and races were ever present, board in hands, Vans on feet. I quickly surmised that a pair of Vans was shorthand for street cred, cool youth culture, for creative kids who didn't have a lot of money and who, like me, journeyed out into the world trying to find their groove. I remember the moment I sat on the floor of my Western Addition apartment and slipped on my first pair.
That pair of Vans was my creative license to take risks and step outside of the lines, to push the envelope and find my own success. So let's take a look back at the shoe and the store that started it all. In Paul Van Doren's recent memoir, Authenticity, he reminds us that the best teachers in the art of retail are the customers themselves. Let me repeat that. The best teachers in the art of retail are the customers themselves. On the very day Paul opened the store, a young woman walked in and loved the Vans silhouette but wanted something that better fit her own style. Vans' first custom shoe was birthed on day one. Vans has always been about self-expression. Paul could never have foreseen his product as the go-to shoe for the mushrooming local skateboard community.
Yes, Vans were more affordable, more durable, gripped the board better due to an exclusive rubber formula and something else. Thanks to the shoe's sticky outer sole, Vans delivered exceptional board feel, giving skaters more control, more speed, and greater maneuverability. In 1977, Tony Alva performed the first vertical aerial, skating in an empty pool, and inadvertently launched the terrestrial sport into the gravity-defying modern era. It's this feat that burst off the wall. That's Vans, pushing boundaries, nailing the undoable. Alva's feet raised the bar and set the stage for an escalation spiral that expanded into snowboarding, BMX, and surf. At one time, these so-called non-traditional outdoor activities were considered fringe. Today, they are official disciplines in the Olympics. What began as canvas shoes for the entire family is now a global brand renowned for action sports and California lifestyle footwear.
Culturally, Vans has long maintained a profile in music, design, and art. An organic association with garage bands developed early, along with other non-A&R music that was bubbling out of Long Beach, Portland, and Seattle. Today, Vans is fluid across multiple genres, from punk to hip-hop to pop. After the acquisition in 2004, Vans grew 10 times over the next 15 years. Since then, the business has declined. The brand wandered away in pursuit of chasing trends at the expense of core consumer focus. We missed major consumer moments. We expanded into value channels and devalued the brand itself. We aged up with the consumer who adopted us early in their life. We lost sight of who we are. We don't need to postmortem it forever. It was a mistake, and we're fixing it.
We're reconnecting to the authentic values of our early days, the pioneering spirit that tapped into overlooked niche activities and kickstarted an action sports movement. So what did we do? Let's start with what worked. We reclaimed skate. With a successful launch of our recent Always Pushing campaign, we reset our focus on youth and anchored our brand foundation in the mindset of skate. Off the Wall is about laying down your own tracks, creating your own momentum. It's about iconoclastic individuality. We reclaimed our relationship with our athletes and put them back at the center of the brand. Our mission now is to recruit, nurture, and maintain the best athletes as they are the leaders in their communities and deeply connected to culture. When we drifted away from our core skate community, we left our specialty retailers in the dust.
Last year, we reached out to our most influential retail partners and unlocked a new initiative for them, the Vans Checkerboard Union. This is an exclusive program dedicated to independent skate shops who serve as community hubs for board sports. It offers differentiated perks and deepens our relationship with these influential and independent accounts. We launched a performance skate shoe and a skate-inspired lifestyle shoe. The performance skate shoe was developed with skater Anthony Van Engelen and was a huge hit at a higher price point of $130. Another strong new style was the new school, a skate-inspired lifestyle shoe that was seeded in late 2023, then scaled in 2024.
It became the number one growth driver in the back half of 2024 and brought new consumers to Vans as they skewed young and female, signaling the importance of newness and footwear forms that pair back to what's trending in apparel. The second thing we did, we launched OTW by Vans, our pinnacle expression for Vans through innovation in style and design. The footwear industry is now largely tuned into a drop culture. So in the past year, we launched collaborations with trailblazers like Ohm Girls, Satoshi, Undercover, Proenza Schouler, and Sterling Ruby to name a few. All of these launches sold out immediately, and we were sold in leading-edge retail institutions like Kith, Undefeated, Bodega, Dover Street, Concepts, Beams, to name drop a bit more. And our teams were in Paris two months ago for the second sell-in of future releases of OTW, and our appointments increased by 50%.
The feedback from these tastemakers was exuberant, and this was the kick of adrenaline we had built for, and we are getting noticed. In 2024, Authenticity 500 ranked Vans the third most authentic brand in the world. Complex named our Satoshi collaboration and their best of '24, and of course, you read the GQ article titled, "It's time to start wearing Vans again." As we repositioned at the pinnacle, we also significantly shifted our approach to the marketplace with a reduced reliance on the value channel, product availability, and content across all tiers. We needed to reset the marketplace both in quantity of door count by tier and the clarity of product segmentation. Basically, this means we right-sized our distribution. We had to edit to amplify. America is our largest region, and where our positioning in the value channel was outsized and had eclipsed over 50% of our doors.
This past year, we exited an additional 1,800 value doors while adding 800 non-value doors, reducing value to a third. That is a significant shift. To be clear, we recognize the importance of a continued presence in the value channel, not just for revenue, but for consumer acquisition. So our ongoing participation in this market will be strategic and deft. The consumer experience, both online and in stores, is woefully dated at Vans, and we are actively giving both channels a facelift. Earlier this week, we launched a new e-comm platform to deliver a superior experience with optimized content and AI-enabled commerce. We know young consumers crave more than a flat transaction. We created an experience-driven engagement in a more app-like environment, which aligns better with their behavior intertwining social and commerce journeys.
You'll see experience elevation, content optimization, image and video transformations, personalized smart search, and enhanced digital self-service, empowering consumers with seamless support tools. Like I said, we just launched this week, and if you have any feedback, you know where to find me. In physical retail, we opened our Vans store in London's West End as a global cultural retail destination in December. The store is the nexus of skateboarding, music, art, and design. This innovative environment reflects the off-the-wall mindset through edgy architectural retail design, immersive experience, and music and art programming. From a product lens, we added new categories that sold out quickly, reinforcing the opportunity we had already identified. We have permission to diversify categories. While you're in town, I'd like to invite you to check out our Fifth Avenue store, where we are piloting new assortment formats, community activations, and store navigation.
Early reads from these stores are exciting, with consumers spending more time in these new experiences and strong initial sales across the box and sellouts within new categories. We are showing up differently, and we will continue to explore new store concepts and formats, so we reclaimed skate. We launched our reentry into pinnacle product. We elevated our distribution. We're improving our digital experience and testing new retail environments, and guess what? It's not enough. Skate and pinnacle markets are not enough. We need to reposition the brand. We're thrilled that consumers who adopt Vans and their youth maintain brand allegiance forever, but we cannot perpetually age up with them. Each new generation embraces Vans as its own. Our focus should perennially target the bracket that has always had an outsized impact on culture. The way young people today pursue independence has completely transformed.
Parents, once viewed as antagonistic, are now enthusiastic. The generation gap has been replaced by a dynamic of support. I don't know about you guys. That was certainly not my experience. Joy has become a form of resistance. Creativity thrives within constraints. Rest has become an act of rebellion. Individuality growing out of conformity and openness flourishing out of diversity. Bottom line, it's all about self-expression. To reflect this generation's uplifting spirit, we are making adjustments in product and the brand at large. The iconic Vans Warped Tour was a major cultural event for youth, blending action sports with live music, and it's making its epic comeback this year for its 30th anniversary. Three cities, over 100 Vans, hundreds of thousands of kids. We cannot wait. We need to show up differently than we have been.
You have started to see and will continue to see a broader expression of Vans. Vans will always inspire young people to keep pushing. While we're proud to have such broad-based unisex appeal, it's the female audience that really moves the needle in revenue and brand culture. Women need to be a critical part of the Vans community, which has up to now luxuriated in its badass heritage of skateboarding, traditionally a male-dominated sport. Revenue from women is at an eight-year low at Vans. Let that sink in. That's almost a decade. In my previous lives, that would have been a five-alarm fire. It's not going to fix itself. We're not going to grow out of it. Before we hit a decade, we have to reverse that slide. Our casting isn't awesome. Our photography is flat, and our styling is missing the mark with young audiences.
It's been addressed, and you'll see that. We need to design for her. I'm not suggesting a Tony Alba collab on a yoga pant, but we have to make women want to come into our stores or go onto our site and expect to find something they spark to. Hell, we need to know what's available in our sizes. Fortunately, if there's anything I know a little bit about, it's women. Expanding in women's is a key unlock for our brand, and it will accelerate, not slow, our growth in men's and kids. In every way, it's the inverse of what happened at Lulu, doubling the men's business while growing women's and expanding categories. I said earlier that we need to reposition the brand and see a broader expression of it. Vans is more than skate. We're California lifestyle rooted in action sports.
I also said earlier that I wanted to elaborate on my vision for the brand. I want you to see what I see to grow this great brand. So what does that look like? This really is a moment for me to provoke what's possible when you go back to your California roots and take the draw from the codes and cultures of skate, surf, BMX, and snow. And what really this shows you is the diversity of aesthetics that we can create off of these sports, as well as off of California lifestyle. And when you think about the California lifestyle, the beauty is you live in an area where you can go skiing or snowboarding in Big Bear. Two hours later, you're in Venice Beach and you're able to surf, and you have enough landmass that you could go skateboarding or BMXing.
The landscape of California is so rich in terms of how it really facilitates these types of sports. And what's different is we're not talking about vertical business units across these sports, but really how are we going to draft off of these to create versatility for young people who are experimenting with their personal styles to give them tools for self-expression. And I'd say, depending on the variety of looks that we can create for our consumers, it will help sell footwear. Footwear, especially the Vans footwear, is incredibly versatile. And to show a range of someone who might go a little more skate to someone who goes a little more extreme in BMX, it can help visualize if this is my personal style, I can still possibly wear the same brand of shoes.
The other thing this really unlocks for us is being able to expand credibly into categories. So I think we know skate pretty well, but if you look at what we can get inspired by in surf, it really is going into categories like open-toed shoes, swimwear, board shorts, more washed-down fleece programs, softer hand feels than what we are offering in skate, and things like accessories and sunglasses. Same thing in BMX, really being able to go after moto-inspired details and going after leather jackets, moto boots. What could that look like in terms of how it influences footwear and the language of footwear? And then really exciting too is snowboarding can get us credibly into categories like outerwear as well as boots and taking a code from all of our snowboard boots to really expand to everyday wearing boots. So you see what's possible here.
Moving into franchises, you heard Bracken speak about it. You heard all of the brand presidents talk about it. This is a pretty critical piece of growth for all of us. I'd say this isn't my first time talking to the investor community about the importance of franchises. Franchise management, for me, it's not just about lifecycle management. It's about engineering growth and building on the equity of an icon. At Lulu, what started as just a black legging, the Align, expanded into a huge head-to-toe assortment, driving a ton of growth, really sharing design codes and feel states. At Vans, it's an even more outsized opportunity given the equity we have across six icons, which have been really underleveraged. This wall represents our old-school franchise. This is just a starting point.
So where we've started expanding is you take an old school, you create a high top, you blend it with some trail expressions, then you create a mule. So this is just creating franchise families within footwear. Imagine what can happen if we start expanding the language of this into other categories like bags, potentially fleece programs. So really, this is absolutely just the beginning. So now you can see what I see. The opportunity is incredible. And yes, we have a lot to do. Our consumer is the ultimate catalyst. Our community creates the culture. Expanding categories and evolving aesthetics will redefine our canvas. At its core, it's about our hyper-obsession. Our hyper-obsession with design and design details, our hyper-obsession with youth culture through the lens of our authenticity, which only Vans can do. So I might not trip over my boyfriend's longboard in our Duboce Triangle apartment.
I no longer get up at the crack of dawn to catch the Altra belt with him to surf Ocean Beach, and you won't find me in line at the Warfield to see Faith No More or the Donnas. I don't just respect this brand. I love it, and the chance to make an indelible mark on its storied history is a privilege. I'm still an outsider pushing at the limits of what's possible, which means now that I'm at Vans, I'm at home. Thank you, and I would like to now introduce Paul to wrap it up.
Welcome to the stage, Chief Financial Officer, Paul Vogel.
All right. Welcome, everyone. Thank you, son, so some of you may notice I'm wearing some Timberlands. I got my Dickies Eisenhower jacket on, and you may be wondering, where's the helmet and shoulder pads that Bracken promised you from the earnings call?
I thought this was more appropriate for today, but in case anyone was wondering, fly eagles fly. Okay. It's great to be here with all of you again today, just a few months since part one of this investor event. I'm now eight months into my role at VF, and my excitement and confidence about the opportunity in front of us continues to grow. As you've seen today, we've assembled an exceptional group of brand leaders who, along with our wider corporate team, are positioning us to advance the VF turnaround. Now, today has really been about the brands, much less so about concrete numbers, but hopefully you've seen the building blocks to return to sustainable growth. Before I go any further, let's go back to what we said in October.
Given our initial targets and then some updated numbers at the last investor day, let me walk you through how to think about the savings and initiatives we've already outlined in a bit more detail. Abhishek and Bracken both mentioned these, but let me be crystal clear. Our initial savings target as part of reinvent was a gross run rate of savings of roughly $300 million, of which we realized about two-thirds in net savings after reinvestment this year. This roughly $200 million in net savings from phase one allowed us to offset the headwinds we saw for merit, inflation, and bonus. That's all behind us now as we finish the initial phase of reinvent this month, as promised. Then, at our October investor day, we announced a second phase of reinvent that is expected to generate an incremental $500 million-$600 million in operating income expansion in fiscal 2028.
This improvement is expected to be evenly split between gross margin and SG&A. Sorry about that. The bottom seven initiatives shown on this slide are the driving force behind this change, and as Bracken and team have showed, we feel really good about our brand positioning and our ability to return to growth, so let me remind everyone of the financial targets we highlighted a few months ago. Those were targets that assumed no growth and were intended as a foundational model that we have a very high degree of confidence in achieving. At a high level, we believe we can return to a 55% gross margin, with SG&A as a percentage of revenue of 45%, equating to a minimum operating goal of 10% on zero growth versus fiscal 2024 revenue. As we stated a few months ago, our goal is to do better than this, but we've shared numbers.
We have a very high degree of confidence in achieving. Now, let me quickly address a question we have repeatedly received over the past few months. What happens if growth returns faster than the no-growth case or better than? Sorry. So back in October, I stated each incremental $1 billion in revenue drives 1.5-2 points improvement in operating margin. That would mean if revenue was $11 billion, our operating margin would be 11.5-12%. But could this be higher? We definitely think so. If we were to return to a more normal and steady yearly growth, there is more leverage to be had. Some of that and how fast it would come would be a decision between stepping up investment, seeing even faster growth, and deciding how much let flow through to the bottom line.
As I said in October, the foundational P&L model that we are building will enable us to return to strong and sustainable cash flow and, of course, supports a healthier balance sheet. Our capital allocation priorities remain unchanged. And as a reminder, we are focused on the top three priorities in the medium term. So first, we remain committed to reducing debt. We paid down the $1 billion term loan in December and will be paying down the upcoming maturity of $750 million later this month. As Bracken said, if we remove our lease obligations, we've already cut nearly 40% of our net debt in just the past 12 months, and we will bring that down further. Second, we will continue to reinvest back into the areas that will drive profitable and sustainable growth, primarily in product design, innovation, and brand-building activities. And third, evaluating an increase in dividend.
While returning capital to shareholders has always been a part of the VF philosophy, our current priorities are to pay down debt and pursue investment opportunities. And once we reach our medium-term leverage objective of less than 2.5 times, we will contemplate portfolio expansion and share buybacks. We currently expect our leverage ratio to be down roughly one full turn versus last year's ratio of 5.1 times. As we have lowered our debt by almost $2 billion, we are still confident in our leverage goal of 2.5 times or lower by 2028. As we mentioned before, turnarounds are rarely linear, but we are making progress in establishing solid building blocks to return to revenue growth and improve margins. And while I know most of what I've shared today is a recap, here are the key takeaways I want to leave you with.
We are committed to achieving an operating margin of at least 10% in fiscal 2028. And a return to growth will drive further operating leverage. We will continue to prioritize paying down the debt in order to reduce our leverage. And last, we are here for growth. And hopefully, today gave everyone insights into how we will return to sustainable, profitable revenue growth. So with that, I thank you, and I'm going to bring Bracken up for Q&A. And everyone, while we are bringing up the chairs, Q&A, we will have microphones. So please wait for the microphones to be passed around so folks on the line will be able to hear you.
Thank you. All right. Let's get started.
If I can do better with the questions. We'll go right ahead.
Am I clicker?
I'm going to go right here.
Jay Sole from UBS.
Hi, Jay.
Bracken, thanks for a great day. A lot of great and great presentations by all your team. Obviously, you've put together a fantastic team. Maybe if we talk about Vans a little bit, I don't know if this is a question more directly for Son, but obviously talked a lot about how you're going to get back to growth. Can you just give us an idea of maybe what your aspiration is? Tell us where you see by the end of the fiscal year Vans sales and EBIT margin and maybe where you think that can go in three years.
I'll stop referencing anything. I really tried very hard, as you know, to protect expectations on Vans from going anywhere. I really do think, and Son, I'll give you the last word on this, but I really do think we don't want a quick fix here.
And this may feel like already anything but quick, but we want fundamental reshaping of the business so we deliver long-term sustainable growth at the right level of profitability. As I think Sun did a great job describing, the causes of this took years, and the fixes are going to take a few years. And I think the fundamentals are in place. I feel so good that we had Son get up here in front of those products and show you kind of how she's thinking about where this is going. I think it really does give you a feel for where this will be over the next few years. But we're not going to give an expectation here for the next year or so.
Thank you. But I understand you asking, Jay. And everybody else in the room will too. Okay, let's go to Sam.
I have three, and I'll start with Vans. Let's do them one at a time. Okay, Sam. What is the definition of the value channel? What stores are you talking about? What stores got done away with? Yeah, I just want to know, is it Ross and TJ's? Is it family? What do you define?
Yeah, we're probably not going to go into that. We try not to ever mention retail partners. You're in the right zone, let's just say.
I mean, you're thinking of family and
you're in the right zone, so now I'd say that.
All right. Number two, with all of Dickies' history, the decision to move to Orange County and moving the culture from Fort Worth to Orange County, how does that work to take the brand where it needs to go?
Yeah, let me jump in on that.
This is part of this bigger picture story that we're really trying to create a company of powerful brands, and so we want the energy, the transfer of knowledge, all the things that go with being a company of multiple brands. We don't have the luxury in every case of being able to have all the brands in one place where they get to overlap. If you've ever been to our office in Switzerland, and how many people in the room have been to our Starbucks office, a few of you, you get a feel for what would be kind of ideal, which is there you can see all the brands. They all have a unique identity within the building, but you also have a lot of cross-collaboration, discussion, transfer of people, and ideas. That's really what we want.
We felt like where we are, because we're really resetting the Dickies brand completely from the start, we felt like we had a moment here where we could do that. We don't have so many people in Dickies, to be honest. We could put it into a place where we actually have two separate buildings. Son basically has one, and Chris will have the other. It's a real campus where you can create an identity in one building and an identity in another. We're going to do our best not to lose the embedded know-how that comes with a transfer like that. We've got experience doing this, so we know what it looks like when you don't do it well and even when you do do it well.
So we're going to really manage that as tightly as we can, but I think it's the right move for the long term.
Thanks. And then lastly, with Timberland, the focus of everything I was seeing was on the Wheat Boot or the Yellow Boot and all of its derivatives, even with the broad number, the 5,009 derivatives and so on. And the question is, in the past, you've had weather boots. You've had some of the best boat shoes out there, a lot of other things that were in the core of outdoor. And everything we saw had a lug sole on it. Everything everybody's wearing from Timberland here has a Yellow Boot-related sole, every picture you showed there. But there's a whole lot more that sort of isn't as fickle a business as that urban consumer that you're taking the derivatives of the Wheat Boot to.
And I'm wondering, what are you doing with all the stuff in the archive up in Stratham? And how are you thinking about going there?
I love that question. Nina, you want to answer that? I love the question.
That was my question as well. I don't know if you, oh,
there you go. Yeah, you can come in the middle because then they'll get you on the video.
So I have this now. I'm all good. But thanks for knowing style numbers and being in Stratham in our archives because it's a really cool place. Your question's great. Obviously, the six-inch sits at the center of the brand. I mean, it's like a privilege to have such an iconic piece of footwear that is world-renowned.
I was just flipping through a little kid's book, and it was like New York City's first words, and one of the words was Tim's right next to taxi. I mean, you can't make that stuff up. So we will never veer from that at the center of the brand. One of the most important things we've been looking at is what are the values of the six-inch boot that are so critical to infuse throughout the brand. So when we look at that, leather leadership, that's something that's core in our DNA. Craftsmanship. The boot was created from craft and innovation. Innovation. How do we innovate around fit, comfort, and weather readiness? Those are all super critical. So when you'll see us expanding beyond the Yellow Boot, think of it as rings coming out. Those values, leather leadership, craftsmanship, innovation will be at the core of what we do.
So that's part one. I think the next really important thing is style aesthetic. The Yellow Boot is very specific, but there are so many ways that it's being styled. And we're seeing that through social media in a way that we've never seen it before, that people are styling it from the city streets to the mountains to everything in between. They're wearing it with shorts. I think you might have seen, you might have picked up the boxer, just the Philly boxer Fulton. Shout out to you. The Philly boxer Fulton wearing Timberlands in his winning match. So there is a lot there still within the Yellow Boot. It creates energy for the brand. We will not go away from it. I think in the past, there was a shyness about how great the Yellow Boot is. Celebrate it.
Just understand why it's so great and infuse it in the organization. The last point I'll make is the feeling of the Yellow Boot. That is not something that we've captured enough of. That deep emotional connection, why people choose to wear a Yellow Boot when they go and walk in the rain, it has to be infused in all of our products. So it's like that badass, bold energy that we are looking at infusing throughout our product. And that wasn't something that was done before.
It's funny, Sam, because that's great. Usually, it's the first time I've seen Nina in a boot in quite a while. She's usually wearing the three-eye, as we call it, which is the,
yeah, they're always wearing the three-eye.
But there's the three-eye, the stone mountain, and then there's the field boot, which is just a killer.
We've got several really great products there. And by the way, the Yellow Boot is not 70% of the sales. It's actually less. It's surprisingly small. So there's a lot of potential in here. Let's go here. Yeah.
Hey, Paul Lejuez, Citi.
Hey, Paul.
Thanks, guys. Curious, to accomplish what you want to accomplish for each of the brands, how much are you going to be relying on your own DTC channels versus your wholesale partners for each of the brands?
Yeah, I think I've said this kind of, I think, in a few different formats. I'll try to say it clearly because I think it isn't a no-brainer when you first think about it. We don't have a plan for that.
What we're really going to do is we want to be in all the places that make sense for us to sell because the consumers really want to buy there, shop there. So that doesn't mean we're going to expand distribution to anywhere anybody is in the place, but strategically, where does it make sense? So we certainly do think we have a better, we can do a lot better in DTC, whether it's online. I made Son take out a reference in her script earlier, which was to say, "Open up your phones and go look at the Vans website right now because we just redid it," and it's actually pretty cool, and it's really up to kind of a best-in-class level now.
And this is just the beginning of what we're going to do, as Abhishek said, "Wait till you see what's coming." So we're going to do a much better job of being an e-tailer. We're going to do a much better job of being a retailer, as Son went through in the Vans case, but in all of our brands. And we're going to do a much, much better job of being a partner for our wholesale partners. And all those are underway. I couldn't tell you what the mix will be at the end of the day. I don't really care. We don't care. We just want to make sure we're effective where we are. And we want to be a great partner for wholesalers.
Thanks. Michael Binetti with Evercore. Maybe one each on the brands.
On Vans, just an idea of the pace of how we'll see Son's influence on the product as we go into back-to-school holiday this year and then into 2026.
Can I say,
I'll let you stand up because they can't see you on the camera. Yeah, there you go. There you go.
And, like, being a sponsor. Don't trip over the screen. Yes. I would say the first thing you'll start to see is really in marketing and a lot of the styling that you'll see on our e-comm come through. And you'll see us focusing very much on women's, which is a lot of what I talked about in terms of a turnaround. So I'd say that's the first point of impact.
And then, as you start to see the styling come through, as well as navigation come through in our retail stores, where we will start to have dedicated women's and men's footwear sections because currently they're combined. So that's some of the more immediate things you'll see from me. And then, starting back to school, mostly in the Americas, I would say, you'll start to see some improvement. And from there, you'll start to see sequential improvement. Certainly, we've been rushing product chases. We got some early signals about our authentic and really chasing into those for summer of this year as well as for our holiday of this year. So you will start to see more sequentially.
Okay.
Yeah. I guess on Timberland, I know you've only got nine stores in the U.S. today, but you've certainly built more than that since 2011.
So some of the prototypes of the past haven't worked very well. What's most important to get right that went wrong in the past to get broader category strength, multi-gender, the new hurdles you're looking at to start signing leases on store economics?
Yeah, I'll jump in and answer that real quick. I do think you'll see us open more Timberland stores, but I wouldn't expect us to wholesale open 50 or 100 stores in the U.S. or something. Right now, if I ask in this room, "Where are you going to go buy your next pair of Tims?" my guess is nobody in the room can come up with a quick answer that pops into your head because we don't have distribution. We're not really well displayed in a lot of the places we are in distribution.
We do have some good wholesale partners that are leaning in right now, but we need our own, in that case, we do need some good brick-and-mortar stores, especially in the key cities, so we're not planning to do it overnight. We're going to make sure, to your point, in the past, we haven't always done this effectively. We're going to do it really effectively and crush a place or two, and then you'll see us open up more, and then we'll see how many we will open. I don't know yet.
Last one on North Face. Similar theme. We've heard multi-season year-round mountain running before. That second quarter has never really moved up that summer quarter. How are you looking at it a little differently than iterations maybe some people have seen in the past? Thank you.
So the question was hard at the end of your
The North Face. We've heard we're going to turn this into a 12-month brand. Four seasons. The summer's really never filled out. We've heard mountain running before on the footwear side and different efforts to turn it into a four-season brand. I'm just curious what you think is the must-get right that would sound a little different to this group than we've heard in the past.
Yeah. Sure. Sure. Thank you for that.
Stand right over there because the camera's coming. Yeah.
First and foremost, we are a winter brand. We started on the mountain. We started with snow. We're going to double down on that. Two of our key areas, climb and trail, have enormous presence in summer activities. And I think one of the huge differences where we've seen incredible success is investing in the innovation in lighter seasons. Right?
So I'll give one example. We launched a technology and a material innovation called Light Range, which is when we talk about elements protection with The North Face, people tend to think snow, ice, but sun, wind, altitude are as difficult and as bad. So Light Range is something for extremely hot temperatures that protects you from sun, wind, and those effects. We sold out in America 100% in that product in the first launch. And we have again coming in for this summer. So I think doubling down on some really unique distinctive product will give us an edge there. But we love winter as The North Face, and we're staying committed to that too. We want to win on both sides, but we know we'll always have a healthy balance. It's probably a little more slanted in the origins of the brand.
I can't see the back of the room either, right? Okay. Let's go to the back of the room because we're going to disadvantage you.
Hey, guys. Simeon and Bimo. Thank you.
Hey, Simeon.
Good to see you. So maybe Carolyn, because you just sat down, I'll force you back up. The 2 to 3X revenue number, can you just oversimplify it in between the three pillars that we had of market growth, market share, products? And then Bracken, I'll throw one back to you. Just how are you thinking about sibling rivalry here? So we're watching footwear for The North Face. We're watching some of these slides start looking a little similar maybe on the brand level. I think we've had two of your brand leaders use badass as code for the brands.
So just how do you make sure you kind of retain the collaboration as well as keeping them separate? Okay.
You want it?
You want it? Tim.
Caroline, let me just start with the numbers part of it first, just in terms of the context. I'm going to, yeah, I'm going to protect her from that side of it. So the 2X, so think about the three things that Caroline talked about. You can think the top two are 90% plus of the business. And so what we're trying to do in that is really frame out just the opportunity in front of us that we think they can double. There wasn't really an intent to give a timeframe on that other than we think there's a massive opportunity that these businesses could be significantly larger. And then I'll let Caroline talk about a little bit too.
And also on the footwear side, coming off of a smaller base, although not insignificant, it's actually growing nicely. But we think Vans has the potential to grow even more in terms of what Caroline just talked about. And then I'll let you expand on it a little bit from there.
Yeah. I mean, I would say that we know from the data and research, and we've gone deep into research all over the world in the last six months. This brand is so much bigger than the revenue. People think The North Face is much bigger. It deserves to be much bigger. It has that type of brand power and reach.
I would also call out that there are some fundamentals in the business today that have to do with things like how many units people are buying when they go in a store, what is the average order transaction that have significant opportunity that if you increase your line architecture, which we are doing, and we add one additional pair of socks to each of those purchases, we meaningfully move the needle. Right? So right now, think of us as very, very broad. We're reaching a lot of people, and we're shallow in terms of volumes of individual sales. So we have enormous opportunity there. The other thing is I mentioned we are very heavy in our offering of classification as outerwear. Right? And today, that offering is over 80%. Outerwear is not a great category for replenishment or repeat sales.
When we buy a jacket, we don't go buy another one in three weeks. Right? So this is why the point about line architecture is critically important, and it's a core fundamental. So even without dramatically changing the business by adding different categories, we have opportunity for growth.
Thank you. Perfect. That's great. Yeah. And on your other question, Simeon, I'm not at all worried about overlaps of categories. We'll worry about that in 10 years when we've got 50% share as a company in running or something. But I'm not worried about it today. In terms of overlaps of the brand characters, the brand characters are so different that you certainly could use the word badass about all of them, but the characters are so different. And I think you can kind of see that in the presentations today. Let's go next to, yep, Laura.
Thank you very much, Bracken and team, for the presentation this morning. Following up on Simeon's question around doubling apparel, more than doubling footwear accessories on The North Face business, in terms of timeframe, it sounds like it could be like five to 10 years. So I'm trying to square away because it's such a large part of the business, a third of the business. How do we square away with the guidance from October with revenues to be flat? So I'm trying to understand that.
Yeah. If we're going to double, how are we flat? You can see how defensively we've managed our guidance. We're either the worst or the best at that so far, depending on your opinion of it. But we're not ready to go there yet. I don't know if we'll—I don't know if we'll ever go there. Here's what I'll tell you.
In a turnaround, you first have to get back to the water level to then talk about what growth is going to look like. And then you've got to get to low growth to talk about what good growth is going to look like. And then you've got to get to good growth before you can talk about what amazing growth is going to look like. So we're not there yet. So when we will get there, I mean, this is a model that I've played before, and I love it. I love this place where we are right now. This is the moment that's the most exciting to me because it's so uncertain for you. It's so sure for me. So I love that. So you don't have to trust me. That's the nature of the way we work together.
But you can believe that I have a lot of conviction around it. Now, at what point will we, as a company, get to the point where we're super growing strong? That's years out. That's a few years out. I mean, it will happen. I believe. Here's how I'll stretch your imagination for a second. I'll say, if you believe what I said in the beginning, then we will get to a point where all of our brands are growing, not some of them. Now, they may not all grow every year for five straight years, but they'll all be growing. In fact, most of them, if not all of them, will be growing at a strong rate. And you can define strong. I have a pretty high aspiration when it comes to strong.
So I believe that will happen, but it's certainly not going to be in the next year or two.
Yeah. I would just add to that. As Sir Bracken said, we obviously want to guide and give you guys numbers and financials that we have a high degree of confidence in. Hopefully, all the brand presidents gave you the optimistic where we think we're going to get to view of the world. We're super optimistic where we're going to get to. We're still in turnaround. Turnarounds sometimes are non-linear. Sometimes turnarounds have fits and starts. I think when you look at this business two or three, four years from now, it's going to be exactly what Bracken talked about.
But right now, I'm only going to feel comfortable giving you numbers that I feel comfortable about, which is why, again, we reiterated what we'd said three months ago about sort of a no-growth scenario. I've also said many times, that's not at all what we are looking to achieve, but it's what I feel comfortable giving you financials around that you guys can say, "All right. I can sleep well at night knowing I feel pretty good about where they're going." And then if you're excited about what you saw today, you can clearly envision an upside to that.
Oh, we only have time for one more question? Oh, man. Okay. We'll go ahead. All right. I'm sorry we don't have time for one more question.
And if we're not addressing you by name also, we can't see anything beyond the first room.
Yeah. We can't see you. We can still have hands on there.
Hey, Dern. You from Barclays. Two questions. I guess when we were listening to the whole presentation, you have prices covered, and you have wearing occasions covered. And the two kind of obvious holes are women's, as Sun had pointed out, but across all the brands, and then the stores. So wondering, where do those fit into the growth profile longer term? And then my second one is franchise management is the most difficult thing to do well consistently. And when you think you're doing it well, you're not. So what does best-in-class franchise management look like? And it's always hard to forgo sales and to say no to those sales. How do you create that discipline in the organization? Thank you.
Yeah. What a great question.
I personally think franchise management is probably - there's probably a bunch of experts in the room who will say this has been around for 100 years, but to me, franchise management in the footwear sense really began aggressively in earnest with the Jordan brand at Nike, and that was whatever, 2012, so I think the world doesn't have a good long history of how to manage franchises very well, so we're all going to be learning. I can look at what - I'll name names, competitors' names. I think what New Balance has done is just masterful as a turnaround. I'm so impressed by them. I think what Nike did with the Jordan brand was masterful. I think Adidas has done some amazing things too.
When I look at all of them, the cool thing is that we're sitting in a lab where there's all these experiments that are going on around us, and we can learn from every one of them, including what we did right and what we did wrong. I would say what we did with Vans was anything but masterful. It was that we rode that thing way too long and expanding distribution at the same time into more and more value channels. There's a lot to learn here. What does franchise management look like at its best? I think I'll stretch my knowledge, and I'll say I think it's something like if you're lucky enough to have three or four legitimate strong franchises, you rotate those through every several years. Maybe in an eight-year cycle, a franchise makes its way back up to the front line again.
In the meantime, the others don't go away completely because they can constrain down for those who really love them. Then you're constantly pumping innovation into each of those franchises as you're doing it and bringing out the new thing on a regular basis. Sun has a term that she used when we first talked, which was, "You need to be a hit business too." They don't have to be big hits. You just need a few hits. It can be small hits. But you need some excitement that comes on a regular basis. That can come from your franchise, but usually it probably comes from something new. So I think a great franchise management approach would have all that in it. What's the proportion of that soup? I think it depends on the brand and also depends on the time. Things are speeding up.
The world's going faster. Communication's faster. There's more volume all the time. Probably that means franchise management will take its character will keep changing as we go on. But one thing I can guarantee you will be the best learner in the industry. We'll be a learning machine.
I think the first part of the question was about female skewing. I can continue to take it in terms of the, I want to see you take that. This will be interesting. I'll take it easily. I mean, look, I think there's a huge opportunity. And I'll use a word we've used a couple of times. We've got four badass females running these brands. And so there's a huge opportunity to grow the female consumer in all those brands while continuing to see the men's grow as well. So I don't think one has to do with the other.
I think we've lost it in a couple of the brands. They never really had it, probably in the case of Altra, where it's never really been there strong enough. Other brands like Vans had it and lost it. But now you've got leaders who understand how to do it. And those female consumers, they come back, they buy a lot, and they also influence purchases of people they come in with. So I'm super excited about it.
And I'll just double down on that. I thought one of the things that Sun said, the way she described what she did at Lululemon or what Lululemon did, was the inverse of what she's going to do here at Vans. At Lululemon, it was, "We got this great women's business. We need to grow a men's business." They grew the men's business dramatically and grew the women's business.
And she said, "We're going to do the opposite here. We're going to dramatically grow the women's business, and we're going to grow the men's business." And I think the cool thing is you've got six or five brand presidents sitting over there, all of whom have direct women's experience. So nobody here is lacking that and men's experience. So we're really in a lucky situation from that standpoint. I'll bring this to a close. I'll go back to where I started in the beginning. I don't know if you like or hate. It depends on where you come from, or you're kind of in the middle on this idea of really imagining into the future farther than we can promise anything. But I am so excited about that. I'm so excited about creating this company that really is all those things I said in the beginning.
But I'm, in many ways, even more excited about where we are right now because we've got a unique team, a unique time. I love this point in turnarounds. It really is exciting to me. And I hope it's exciting to you. And I'm sorry that we didn't get to answer all your questions, but we'll try to have as many meetings with all of you as we can and get as many as we can answered. And then we'll do this regularly, and you can hold us accountable for everything we said. All right. Thanks a lot.
Thank you.