Chairman, President & Chief Executive Officer at V.F.
Good afternoon, everyone. And thank you for joining our first quarter fiscal 2023 earnings call. I will take you through an operational update of our business which will be followed by a review of our financial performance by our CFO, Matt Puckett.
I want to start by addressing the evolution of the macro environment since we last met in mid-May. Excluding China, consumer health is generally good across our markets. Although, I won't be the first person to point out that sentiment has softened leading to changing behavior amongst consumers who were being forced to be more choiceful and cautious in their spending in the near-term.
From our point of view, we see this being largely confined to the value end of the marketplace where VF has very little exposure. To-date, we have seen limited impact on the mid-to-higher end consumer where the majority of our brands are positioned in terms of demographic and distribution. We have a strong and resilient family of brands that are well positioned within their respective segments and across the VF portfolio, we have a greater number of high performing brands today than ever before.
Our TAMs are healthy and maintained good momentum and we remain under penetrated in certain areas, with the opportunity to gain further share in growing markets. We are continuing to invest in our brands, enabling the creation of innovative products and capabilities to drive enhanced consumer engagement and loyalty across all touch points.
We are working closely with our retail partners to drive sell-through and ensure our family of brands remains at the forefront of consumers' minds. To our well-established strategic platforms and capabilities, we are mitigating headwinds faced across the marketplace and the persistent impact of COVID in China, while reinforcing our competitive advantages. Amidst this backdrop, we delivered a healthy topline performance in Q1 achieving revenue of $2.3 billion, up 7% on a constant dollar basis, ahead of our initial expectations and in fact, excluding China, the business grew low-double digits. Our big four brands grew 6% in aggregate, led by The North Face and Timberland. The remainder of the portfolio grew 16%.
And lastly, before I go into more details on the brands. I'd like to highlight that we remain committed to returning cash to shareholders with our dividend which amounted to $194 million in the quarter.
I will start with Vans, I'd like to take a minute to update you on the work underway, then go into the details of the brand's performance. Behind the scenes, our teams are diligently working to address the key headwinds we have identified.
First on China which was largely in line with our cautious expectations, reflecting macro challenges in COVID disruption. Driving energy and engagement, Vans opened its first owned Taiwan store in June, along with the brand mobile app. We launched a new collaboration with Brain Dead [Phonetic] which sold out completely in the first hour. Our 6.18 shopping event was expanded onto the Douyin and Duwu platforms and rose by mid-single digits versus last year.
Finally, we partnered with Tencent on 58 virtual products for phase one of our Medivir's activation and in four days achieved 43 million impressions. We remain confident of the long-term growth opportunity Vans has in China.
Second, we are seeing early signs of positive response from customers on our ongoing efforts to rebuild our core classics strategy and energy around our five icons. The Classic Since Forever campaign is showing improved ROI in the first two months, with over 25 million views globally.
Phase-2 of the campaign launched with support from Anderson Paak, Vans music influencer including live appearances in London stores and a live performance at our House of Vans venue. The first signature product dropped on our U.S. online platform sold out in 24 hours.
Brand heat has begun to show some bright spots. We saw nearly 8% growth in Vans' family members versus Q4 reaching nearly 24 million members globally which represents a 41% increase versus last year. We also generated strong sell-through of Sailor Moon and Stranger Things collaborations, including exclusive online customs pre-releases.
Our Stranger Things collaboration was the second biggest customs launch since Harry Potter and the in-line product will launch in early September. We hosted pre-launch events for our new clinical business unit at Paris Fashion Week with top tier accounts including a sell-in event and a twitch live stream of the Brain Dead launch. The Joe Freshgoods Pinnacle Colabs sold through quickly with 3 times average sales price in resale market. A second drop is coming in holiday.
Finally, in our Americas D2C business, we are working to a set of agile actions to capture and optimize traffic and drive higher conversion such as front-of-store merchandising updates and quick floor set changes. We are seeing a positive initial response across key product stuff. We continue to monitor our customer satisfaction levels but we are scoring above the peer set.
Vans Q1 sales declined by 4%. Excluding China, global sales were up 4%. As mentioned, a number of targeted actions are being implemented at Vans under the leadership of Kevin Bailey. While our financial performance is not yet where we would like it to be, we are encouraged by the work underway to reignite momentum.
The brand is healthy which is clearly evident when we launched truly innovative product as indicated with the recent global collaborations, all of which resonated with our consumers and generated high rates of sell-through.
We continue to see strong growth in our Vans Family membership, where members have higher frequency and rates of spend. Overall, we are encouraged with the early progress being made with actions underway and confident in long brands, long-term prospects to reignite growth.
The North Face had another outstanding quarter with sales up 37% representing broad-based growth across regions and channels. Growth during the quarter was fueled by our 365 product initiatives, with warm weather apparel and accessories, as well as rainwear generating strong performances.
Collaborations continue to drive brand heat including the Members Only to Earth Day inspired collaboration which drove high digital sell-throughs in the U.S. and EMEA. Our return to travel lines also performed well, including bags and luggage and we saw early positive performance for our PACS business for back-to-school.
Our marketing campaigns are clearly resonating with our consumers, starting with our Full Circle Everest expedition which promoted access to the outdoors with over 5 billion impressions. Our Pride campaign was well received and allowed us to broaden our reach and welcome new consumers to the brand and The North Face ranked number one in pre-sale revenue for the outdoor category during the all-important 6.18 China Shopping Holiday. We continue to see growth in our Explore Past loyalty program and who celebrated its one-year anniversary with over 900,000 sign ups translating to 50% growth year-over-year.
Finally, we are thrilled to have welcome Nicole Otto as our new brand President during the quarter, following the successful transition period. She brings with her a deep understanding of the consumer engagement strategies in a wealth of industry experience. With a proven innovator and future-focused leader, she steps in at an opportune time with strong product pipelines positioning the team to further drive our strategies.
The positive inflection at Timberland continued in Q1 with another quarter of double-digit sales growth, up 14%, driven by strong performances in EMEA and Asia-Pacific. We are sharpening our consumer focus and accelerating a launch culture to attract new consumers to the Timberland brand and it's paying off as we see success stories from the elevation of our iconic boat shoes globally with generation both to the creation of a footwear design and innovation experience inside Fortnight.
Our commitment to product innovation and craftsmanship continues to serve us well. Our Q1 growth was driven by men's footwear, led by outdoor, across lifestyle hike, trekkers and seasonal executions like trail-ready sandals. Apparel was also strong, especially lightweight outerwear and logo keys, with apparel as a whole accounting for 20% of quarterly sales.
We continue to drive equal innovation with the focus on circularity in building a greener future. On Earth Day, we introduced the Timberloop trekker, our first footwear product that can be disassembled and recycled at the end of its journey. We also expanded our Timberloop take-back program from the U.S. to include the U.K., France, Italy and Germany.
In Pro, we saw excitement around our first collaboration with Samuel Adams with the limited edition work boots selling out in one week. Initiatives like these are key to connecting new and existing consumers from work, to work, to weekend. Across the Board, we are excited about the trajectory of the Timberland brand and its opportunities for future growth.
Finally on Dickies, global brand sales were down 13%, reflecting softer trends in the Americas value end consumer in a more conservative inventory posture of our largest customer in the U.S. It's worth noting that excluding sales from this customer, revenue in the Americas and globally were up mid-single digits in Q1.
In APAC, Dickies was impacted in China by lockdowns but saw positive growth across other markets in the region. Our reset European business has seen continued strong performance with regional sales up 30% driven by work lifestyle products.
We kicked off our 100-year anniversary campaign, MADE IN DICKIES which drove higher traffic to and average order value on our e-com sites in the U.S. and EMEA. We are generating solid growth globally across icons, women's and work lifestyle, while work wear has been soft reflecting a larger exposure to the value end.
Exciting collaborations, such as with Supreme and New York Sunshine are generating momentum and energy, while enabling Dickies to broaden its distribution into Tier Zero accounts. The underlying performance of Dickies remains positive.
Outside the top four brands, the balance of the portfolio generated revenue growth of 16%. Starting with Supreme, the brand was broadly flat in the quarter and largely in line with our plan. Our European stores performed well and benefited from the openings in Berlin and Milan in the prior year, where there continues to be a high level of energy and excitement for the brand.
As we indicated in May, we are excited to be resuming enhancement and expansion of the store network in coming months. We have also returned to conducting in-person consumer engagement with recent events in Milan, New York and Paris which have received a positive response.
We continue to be pleased with the performance of our outdoor emerging brands which collectively grew 15% driven by Ultra which was up 34%, maintaining its number one position in trail and capturing new consumers as it leverages its new products on the road. We continue to focus on product innovation and development and recently entered the space of speed shoes with the launch of the Vantage carbon Shoe.
We are seeing an improving performance of our PACS business with stronger demand across the bag and travel category and our brands in the Americas and EMEA during the first quarter. Revenue was up more than 30% versus last year, a little ahead of schedule, driven by healthy order books, higher reorder rates and anticipation of back-to-school shipments where the season is off to a good start.
Let me take a minute to update you on the progress we are making on our purpose led to sustainability initiatives. As part of our roadmap to meet our Science Based targets, VF has invested across a number of key regenerative materials.
Through a collaboration between Vans, The North Face and Timberland, we invested in the first regenerative rubber pilot in the world in Thailand with Pera Genesis International. We continue to partner with New Zealand Marino to create the first regenerative wool platform in the world, in collaboration with Smartwool and icebreaker.
These projects help deepen the understanding of these benefits to support farmers' regenerated journey. It had been creating a captive supply of raw materials for use in our products. We continue to receive recognition for our efforts and transparency with Timberland and The North Face tied for second place and Vans taking third place on the fashion transparency index.
Finally, we remain committed to advancing our efforts on diversity and inclusion with the first All-black Mount Everest Climb sponsored by the VF Foundation, The North Face and Smartwool.
In summary, we delivered a solid topline performance in Q1, ahead of our initial expectations, amidst the softer consumer environment and importantly, we are maintaining our operating outlook for fiscal 2023.
This is a testament to the resiliency of our purpose-built family of brands which is focused on the outdoor, street wear and active spaces that benefit from favorable consumer tailwinds. I remain impressed by and proud of our teams, whose passion, perseverance and execution, continue to drive our success.
Looking forward, both uncertainty persists across geographies and marketplaces from ongoing macro-economic headwinds, we are confident in our strategies. We remain focused on the things that we can control and we will continue our strategic investments to ensure long-term sustainable and profit growth.
With that, I will hand over to Matt and take you through the financials. Matt?