VFC
#That is a really good question and actually we have a habit question before, that doesn't happen to us that often.
Well done.
Just thinking about it quickly and from a high level because we have by brand strategies for the next five years that we are looking at and they include everything that we anticipate and changes in shopper behavior and so we don't see that causing a fundamental change to the mechanics of our P&L which I think was your question.
We don't see that but that is ---+ I'm looking around the room to see if anybody else sees anything that I don't see.
So no.
What we will continue to see is an expansion in our D2C business particularly through e-commerce, an expansion of our international business which as you know very well is very profitable business for us and because the tax rates are lower outside the United States than they are in the United States that helps us create shareholder value and we still have a lot of opportunity outside the United States.
I will take a stab at this one.
I think the sales on the non-weather impacted businesses or categories were very strong.
I mean in the case of The North face I referenced the success we saw with our Mountain Athletics Collection up 40%, the Thermoball franchise continuing to grow nicely not just here in the US but globally.
Our Vans business had another breakout year, up 16% and when you take into effect FX and the 53rd week and I would tell you all of those would be non-weather related businesses.
But even there, the Mountain edition collection of both footwear and apparel saw significant sell through giving a great momentum going into this year.
So it really is those heavily insulated styles where we saw the slowdown.
I am sorry.
<UNK> will grab that second portion.
I guess the question on the second part of that was the aggressive inventory actions, where do we think that inventory ultimately ended up.
I guess the answer is we don't, we can't really definitively answer that.
Let me tell you what the actions we took were so it was varied.
We discounted through our own outlets and our own full price retail.
In some cases, we sold some off-price goods and the weather has turned a bit this year so far in 2016.
Certainly some of that has sold through.
Hard to speculate how much.
Maybe I start with the first question the wholesale scenario in Europe.
I think <UNK> mentioned it in his opening script, the first nine months actually we were tracking as we had planned.
We were growing mid single-digit as per hour plan.
The challenge was more on the last quarter where the weather affected us as well.
I think it was widely reported and that particularly challenged our cold winter brands.
On the other one, the Kipling for instance, Eastpak, we did actually pretty well so would not affect it there.
All in all I think also snow came and it got cold in Europe a little bit later but it came so inventories are pretty normalized now so that is good news.
The second part of the question, what was the second part.
We haven't quantified what that might be.
I will start with that and then I will have <UNK> <UNK> pipe in on something specific going on in Jeanswear.
Speed and nimbleness within our supply chain is top of mind and it always is.
In fact, our internal production is extremely responsive and is one of the key strengths of our Jeanswear businesses.
We are looking at being able to transfer that type of thinking through our Third Way programs into the sourced side of the business.
And on top of that with our new innovation centers now in place and up and running, we have some specific projects both in our Jeanswear and technical apparel groups partnering with our supply chain on longer-term advanced manufacturing initiatives that would absolutely make us more nimble, add speed, partnered with the upstream merchandising capabilities within our businesses where we are constantly looking at ways to really reduce lead times, increase frequency of flow to be more relevant and more frequent in front of our consumers.
<UNK> might want to talk to you a little bit about something going on in Jeanswear.
I most certainly can.
We have a project going on right now and <UNK>, as you know, we own our factories in this hemisphere and we actually use those factories and are planning on using those factories as a weapon.
It is a strategic advantage for us to have those here and we've really embarked upon a project with our Jeanswear teams on taking our cycle times down so from concept to the time a consumer can purchase that product, we are really working on and have a pretty big project going on on how we take that lead time down, how we work throughout our entire supply chain in combination with our merchant team in bringing the consumer the products that they are looking for much quicker and much faster than we have in the past.
And then in combination with that, we have a parallel program where we are working on some small batch programs where we can go ahead and get in style and get on trend really quickly where we haven't done that as fast as we would like in the past.
So those two projects are going on right now at Jeanswear and we are pretty happy with the progress we are making.
And I can talk about that in the future as we progress down the line.
I will talk about Vans and then I will let <UNK> talk about the operating profit.
I think just as the fourth quarter softness that you have heard us and others talk about had some impact on our Vans wholesale business, certainly <UNK> <UNK> spoke specifically about a Classics inventory build in a couple of our key markets, having an impact on our wholesale build.
We really see that working through over the course of the year.
I think it is important to note though we have a number of styles, other collections for example, our Sk8-Hi, Old Skool that are performing extremely well and much stronger than our competition.
And I think another catalyst there would be our D2C and e-commerce performance that continues to perform very, very strongly and it is really that balanced model between wholesale and D2C for our Vans business that allows it to continue to show such significant growth.
And just to add on the second part of your question about the 53rd week, sure, it of course has an impact on profit, probably a couple of points for the year.
So the 12% would be a couple of points higher and remember what <UNK> said, if you really want to take noise out and look over the last two years, we have averaged 13% and that is probably the right way to look at it.
So I think as we look at the off price lever, our businesses, we have our outlet stores that are our first choice where you see us holding inventory that <UNK> referenced.
When we look outside of our model, we have got some very strategic partners that have worked with us very, very well over the years.
And our exposure year-over-year is up slightly but not to a degree that would have us at all concerned.
I can't really speak to the appetite for them.
I can tell you in our quick movement and strong relationship, we feel very good with where we are with our inventories going into next year and not really sure ---+ can't really comment on how those partners sit in their relative business.
<UNK>, I will add to that because I said this, I think it was <UNK>'s question at the very beginning, we reacted early and aggressively to the slowdown that we saw coming at us and it was only 9% growth in inventory.
And we think that is going to look pretty good versus some others in our space.
And so we moved on our inventory, now that came at and earnings per share cost.
It absolutely did and a gross margin rate cost but we would rather come into this year with as much of that behind us as possible versus dragging around a big inventory anchor for the next six to nine months, maybe 12 months and we think some people are going to be doing that.
This is <UNK>.
Obviously <UNK>, your that we are executing out of the gates a little bit slower in the first half but through business development opportunities and also a focused team around the Red Kap and Bulwark brand, we do feel that the positive momentum in the second half will continue that we have had in the previous years.
And I think the most important piece of that is we do have some big product introductions.
So it is a product story there too.
We've got our continuation of our shop line which kicks off several big new initiatives and big items in the second half.
So we are feeling more confident as the economy kind of moves ahead forward in the next half of next year.
<UNK> <UNK> is going to take that question for us.
I am actually a little under the weather today so I am trying to reduce my talking.
Okay, Robert, I think you heard me saying I was always tend to give the same answer.
China is a (inaudible) for us.
Is it a great opportunity long-term.
Many people talk about China, the slowdown in China.
The fact is when we talk China it is greater China, we grew 13% in constant dollars in 2015 and that includes Hong Kong which was widely reported being down because of tourists.
So Mainland China was even higher for us and we expect similar numbers for 2016.
So actually we are performing well in China.
As you know, we are active with primarily four brands and The North Face, Vans, Timberland and Kipling.
For the rest we have a distributor model.
So there is a long way to go.
We have about 2500 doors on four brands which benchmarking two large players with [a play of about 5000, 6000, 7000 so we have a long way to go there.
Jeanswear, we act with Lee in China.
And I mentioned that in my script, it is doing extremely well.
We have a leadership position there in that market driven by product innovation in Jade.
I mentioned we are candidate to win an award.
We are really doing well, we are up this year again double digits and it is good.
It is really good.
We see China, Greater China in two halves.
There absolutely has been a slowdown in Hong Kong and our business is really strong in Mainland China and the two of those together were up 13% as <UNK> <UNK> said which tells you how strong the Mainland China business is and we are not anticipating it being much better or worse.
So we are right in that zone of 13.
Just a quick comment.
First, thank you for taking so much time with us today.
We are disappointed in our fourth-quarter numbers for sure.
But we are not disappointed in our performance for the last year.
We think we threaded the needle really well coming through a surprising and difficult fourth quarter and that we are positioned to put ourselves right back on track towards our 2017 growth rates that we have talked about.
As we have said, we have a cautious outlook for this year at this point and we think that is a prudent thing to do.
And we will give you another update in April.
Thank you so much.
