- Revenue from continuing operations decreased 48 percent
(down 47 percent in constant dollars) to $1.1 billion;
- Active segment revenue decreased 54 percent (down 53 percent
in constant dollars) including a 52 percent (51 percent in constant
dollars) decrease in Vans® brand revenue; Outdoor segment
revenue decreased 44 percent (down 43 percent in constant dollars)
including a 45 percent (44 percent in constant dollars) decrease in
The North Face® brand revenue; Work segment revenue
decreased 19 percent (down 18 percent in constant dollars)
including a 16 percent (15 percent in constant dollars) decrease in
Dickies® brand revenue;
- International revenue decreased 39 percent (down 37 percent
in constant dollars); Europe revenue decreased 48 percent (down 47
percent in constant dollars); Greater China revenue was flat (up 3
percent in constant dollars), including an increase of 5 percent (9
percent in constant dollars) in Mainland China;
- Direct-to-Consumer revenue decreased 37 percent; Digital
revenue increased 78 percent (up 81 percent in constant
dollars);
- Gross margin from continuing operations decreased 340 basis
points to 52.9 percent; on an adjusted basis, gross margin
decreased 220 basis points to 54.1 percent;
- Operating income (loss) from continuing operations on a
reported basis was $(247) million; on an adjusted basis, operating
income (loss) from continuing operations was $(230)
million;
- Earnings (loss) per share from continuing operations was
$(0.71). Adjusted earnings (loss) per share from continuing
operations was $(0.57); and,
- VF ended the first quarter of fiscal 2021 with inventories
up 2 percent, approximately $2.8 billion of cash and short-term
investments in addition to $2.23 billion remaining under VF's
revolving credit facility; the company also returned $187 million
to shareholders through dividends.
VF Corporation (NYSE: VFC) today reported financial results for
its first quarter ended June 27, 2020. All per share amounts are
presented on a diluted basis. This release refers to “reported” and
“constant dollar” amounts, terms that are described under the
heading “Constant Currency - Excluding the Impact of Foreign
Currency.” Unless otherwise noted, “reported” and “constant dollar”
amounts are the same. This release also refers to “continuing” and
“discontinued” operations amounts, which are concepts described
under the heading “Discontinued Operations - Occupational Workwear
Business.” Unless otherwise noted, results presented are based on
continuing operations. This release also refers to “adjusted”
amounts, a term that is described under the heading “Adjusted
Amounts - Excluding Costs Related to Specified Strategic Business
Decisions.” Unless otherwise noted, “reported” and “adjusted”
amounts are the same.
“VF is built for this moment, which is what gives us continued
confidence and optimism,” said Steve Rendle, VF’s Chairman,
President and CEO. “Our financial and operational rigor, the
affinity consumers have for our iconic brands, and the progress
we’ve made in recent years with our digital transformation have us
well-positioned to not only manage the complexities of the current
environment, but to drive long-term growth. As we continue through
our fiscal year, we’ll build on the strengths we’re already seeing
in the core elements of our strategy, including maintaining our
strong cash and liquidity position and further accelerating our
digital business worldwide, especially in China.”
Constant Currency - Excluding the Impact of Foreign
Currency
This release refers to “reported” amounts in accordance with
U.S. generally accepted accounting principles (“GAAP”), which
include translation and transactional impacts from foreign currency
exchange rates. This release also refers to “constant dollar”
amounts, which exclude the impact of translating foreign currencies
into U.S. dollars. Reconciliations of GAAP measures to constant
currency amounts are presented in the supplemental financial
information included with this release, which identifies and
quantifies all excluded items, and provides management’s view of
why this information is useful to investors.
Discontinued Operations - Occupational Workwear
Business
On January 21, 2020, VF announced its decision to explore the
divestiture of its Occupational Workwear business. The Occupational
Workwear business is comprised primarily of the following brands
and businesses: Red Kap®, VF Solutions®, Bulwark®, Workrite®,
Walls®, Terra®, Kodiak®, Work Authority® and Horace Small®. The
business also includes certain Dickies® occupational workwear
products that have historically been sold through the
business-to-business channel.
During the three months ended March 2020, the company determined
that the Occupational Workwear business met the held-for-sale and
discontinued operations accounting criteria. Accordingly, the
company has reported the related held-for-sale assets and
liabilities as assets and liabilities of discontinued operations
and included the operating results and cash flows of the business
in discontinued operations for all periods presented.
Adjusted Amounts - Excluding Costs Related to Specified
Strategic Business Decisions
The adjusted amounts in this release exclude costs related to
strategic business decisions in South America and the operating
results of jeanswear wind down activities in South America
following the spin-off of Kontoor Brands. The adjusted amounts also
exclude certain cost optimization activities indirectly related to
the strategic review of the Occupational Workwear business. Total
costs were approximately $16 million in the first quarter of fiscal
2021. In addition, the first quarter of fiscal 2021 excludes
approximately $42 million of noncash non-operating expenses related
to the release of certain currency translation amounts associated
with the wind down activities in South America.
Combined, the above items negatively impacted earnings per share
by $0.14 during the first quarter of fiscal 2021. All adjusted
amounts referenced herein exclude the effects of these amounts.
Reconciliations of measures calculated in accordance with GAAP
to adjusted amounts are presented in the supplemental financial
information included with this release, which identifies and
quantifies all excluded items, and provides management’s view of
why this information is useful to investors.
COVID-19 Outbreak Update
As the global impact of COVID-19 continues, VF remains first and
foremost focused on a people-first approach that prioritizes the
health and well-being of its employees, customers, trade partners
and consumers around the world. To help mitigate the spread of
COVID-19 and in response to public health advisories and
governmental actions and regulations, VF has modified its business
practices, including the temporary closing of offices and retail
stores, instituting travel bans and restrictions, implementing
health and safety measures including social distancing and
quarantines.
All of VF's retail stores in the APAC region, including Mainland
China, re-opened during the first quarter. Over 90 percent of VF’s
retail stores in the EMEA region re-opened during the first
quarter, with most of the stores that remained closed located in
the UK. In North America, 75 percent of all retail stores were open
at the end of the first quarter. Additional stores have re-opened
since the end of the quarter, partially offset by over 120 retail
stores that have since temporarily re-closed due to localized
resurgence of COVID-19 outbreaks and resulting government action
and public health advisories. VF's wholesale customers in APAC,
North America and EMEA have re-opened most of their retail
stores.
The majority of VF's supply chain is currently operational.
Suppliers are complying with local public health advisories and
governmental restrictions which can result in product delays. VF is
working with its suppliers to minimize disruption. VF's
distribution centers are operational in accordance with local
government guidelines but are experiencing intermittent disruptions
while maintaining enhanced health and safety protocols.
VF is continuing to monitor the COVID-19 outbreak globally and
will comply with guidance from government entities and public
health authorities to prioritize the health and well-being of its
employees, customers, trade partners and consumers. As COVID-19
uncertainty continues, VF expects ongoing disruption to its
business operations.
First Quarter Fiscal 2021 Income Statement Review
- Revenue decreased 48 percent (down 47 percent in
constant dollars) to $1.1 billion driven by store closures and
lower consumer demand as a result of the COVID-19 outbreak and
related government actions and regulations.
- Gross margin decreased 340 basis points to 52.9 percent,
primarily driven by elevated promotional activity to clear excess
inventory, partially offset by favorable mix shift toward higher
margin businesses. On an adjusted basis, gross margin decreased 220
basis points to 54.1 percent.
- Operating income (loss) on a reported basis was $(247)
million. On an adjusted basis, operating income (loss) was $(230)
million. Operating margin was (22.9) percent. Adjusted
operating margin was (21.4) percent.
- Earnings (loss) per share was $(0.71) on a reported
basis. On an adjusted basis, earnings (loss) per share was
$(0.57).
Balance Sheet Highlights
Inventories were up 2 percent compared with the same period last
year. During the quarter, VF returned approximately $187 million of
cash to shareholders through dividends. As part of the company's
liquidity preservation actions during the ongoing COVID-19
outbreak, the company has suspended its share repurchase program.
VF has $2.8 billion remaining under its current share repurchase
authorization.
Full Year Fiscal 2021 Outlook
Due to the uncertainty of the duration and severity of COVID-19,
governmental actions and regulations in response to the pandemic
and the speed with which the pandemic is developing and impacting
VF, its consumers, customers and suppliers, it is not possible to
provide a financial outlook for full-year fiscal 2021 at this time.
However, second quarter fiscal 2021 revenues are expected to be
down less than 25% and full-year fiscal 2021 free cash flow is
still expected to exceed $600 million.
Dividend Declared
VF’s Board of Directors declared a quarterly dividend of $0.48
per share, payable on September 21, 2020, to shareholders of record
on September 10, 2020. Subject to approval by its Board of
Directors, VF intends to continue to pay its regularly scheduled
dividend and is not currently contemplating the suspension of its
dividend.
Webcast Information
VF will host its first quarter fiscal 2021 conference call
beginning at 8:30 a.m. Eastern Time today. The conference call will
be broadcast live via the Internet, accessible at ir.vfc.com. For
those unable to listen to the live broadcast, an archived version
will be available at the same location.
Presentation
A presentation on first quarter fiscal 2021 results will be
available at ir.vfc.com beginning at approximately 7:30 a.m.
Eastern Time today and will be archived at the same location.
About VF
Founded in 1899, VF Corporation is one of the world’s largest
apparel, footwear and accessories companies connecting people to
the lifestyles, activities and experiences they cherish most
through a family of iconic outdoor, active and workwear brands
including Vans®, The North Face®, Timberland® and Dickies®. Our
purpose is to power movements of sustainable and active lifestyles
for the betterment of people and our planet. We connect this
purpose with a relentless drive to succeed to create value for all
stakeholders and use our company as a force for good. For more
information, please visit vfc.com.
Forward-looking Statements
Certain statements included in this release are "forward-looking
statements" within the meaning of the federal securities laws.
Forward-looking statements are made based on our expectations and
beliefs concerning future events impacting VF and therefore involve
several risks and uncertainties. You can identify these statements
by the fact that they use words such as “will,” “anticipate,”
“estimate,” “expect,” “should,” and “may” and other words and terms
of similar meaning or use of future dates, however, the absence of
these words or similar expressions does not mean that a statement
is not forward-looking. All statements regarding VF’s plans,
objectives, projections and expectations relating to VF’s
operations or financial performance, and assumptions related
thereto are forward-looking statements. We caution that
forward-looking statements are not guarantees and that actual
results could differ materially from those expressed or implied in
the forward-looking statements. VF undertakes no obligation to
publicly update or revise any forward-looking statements, whether
as a result of new information, future events or otherwise, except
as required by law. Potential risks and uncertainties that could
cause the actual results of operations or financial condition of VF
to differ materially from those expressed or implied by
forward-looking statements include, but are not limited to: risks
arising from the widespread outbreak of an illness or any other
communicable disease, or any other public health crisis, including
the coronavirus (COVID-19) global pandemic; the level of consumer
demand for apparel, footwear and accessories; disruption to VF’s
distribution system; the financial strength of VF’s customers;
fluctuations in the price, availability and quality of raw
materials and contracted products; disruption and volatility in the
global capital and credit markets; VF’s response to changing
fashion trends, evolving consumer preferences and changing patterns
of consumer behavior; intense competition from online retailers;
manufacturing and product innovation; increasing pressure on
margins; VF’s ability to implement its business strategy; VF’s
ability to grow its international and direct-to-consumer
businesses; retail industry changes and challenges; VF’s and its
vendors’ ability to maintain the strength and security of
information technology systems; the risk that VF’s facilities and
systems and those of our third-party service providers may be
vulnerable to and unable to anticipate or detect data security
breaches and data or financial loss; VF’s ability to properly
collect, use, manage and secure consumer and employee data; foreign
currency fluctuations; stability of VF’s manufacturing facilities
and foreign suppliers; continued use by VF’s suppliers of ethical
business practices; VF’s ability to accurately forecast demand for
products; continuity of members of VF’s management; VF’s ability to
protect trademarks and other intellectual property rights; possible
goodwill and other asset impairment; maintenance by VF’s licensees
and distributors of the value of VF’s brands; VF’s ability to
execute and integrate acquisitions; changes in tax laws and
liabilities; legal, regulatory, political and economic risks; the
risk of economic uncertainty associated with the exit of the United
Kingdom from the European Union (“Brexit”) or any other similar
referendums that may be held; adverse or unexpected weather
conditions; VF's indebtedness and its ability to obtain financing
on favorable terms, if needed, could prevent VF from fulfilling its
financial obligations; climate change and increased focus on
sustainability issues; and risks associated with the spin-off of
our Jeanswear business completed on May 22, 2019, including the
risk that VF will not realize all of the expected benefits of the
spin-off; the risk that the spin-off will not be tax-free for U.S.
federal income tax purposes; and the risk that there will be a loss
of synergies from separating the businesses that could negatively
impact the balance sheet, profit margins or earnings of VF. More
information on potential factors that could affect VF’s financial
results is included from time to time in VF’s public reports filed
with the SEC, including VF’s Annual Report on Form 10-K, and
Quarterly Reports on Form 10-Q, and Forms 8-K filed or furnished
with the SEC.
VF CORPORATION
Condensed Consolidated
Statements of Operations
(Unaudited)
(In thousands, except per
share amounts)
Three Months Ended
June
2020
2019
Net revenues
$
1,076,293
$
2,050,654
Costs and operating expenses
Cost of goods sold
506,951
896,284
Selling, general and administrative
expenses
816,151
1,058,405
Total costs and operating expenses
1,323,102
1,954,689
Operating income (loss)
(246,809
)
95,965
Interest, net
(27,949
)
(15,583
)
Other income (expense), net
(38,187
)
5,554
Income (loss) from continuing
operations before income taxes
(312,945
)
85,936
Income tax expense (benefit)
(35,203
)
20,663
Income (loss) from continuing
operations
(277,742
)
65,273
Loss from discontinued operations, net
of tax
(7,871
)
(16,052
)
Net income (loss)
$
(285,613
)
$
49,221
Earnings (loss) per common share -
basic (a)
Continuing operations
$
(0.71
)
$
0.16
Discontinued operations
(0.02
)
(0.04
)
Total earnings (loss) per common share
- basic
$
(0.73
)
$
0.12
Earnings (loss) per common share -
diluted (a)
Continuing operations
$
(0.71
)
$
0.16
Discontinued operations
(0.02
)
(0.04
)
Total earnings (loss) per common share
- diluted
$
(0.73
)
$
0.12
Weighted average shares
outstanding
Basic
388,695
396,727
Diluted
390,791
401,914
Cash dividends per common share
$
0.48
$
0.51
Basis of presentation of condensed
consolidated financial statements: VF operates and reports
using a 52/53 week fiscal year ending on the Saturday closest to
March 31 of each year. For presentation purposes herein, all
references to periods ended June 2020 and June 2019 relate to the
13-week fiscal period ended June 27, 2020 and the 13-week fiscal
period ended June 29, 2019, respectively, and references to March
2020 relate to the balance sheet as of March 28, 2020.
(a) Amounts have been calculated using
unrounded numbers.
VF CORPORATION
Condensed Consolidated Balance
Sheets
(Unaudited)
(In thousands)
June
March
June
2020
2020
2019
ASSETS
Current assets
Cash and equivalents
$
2,145,111
$
1,369,028
$
560,882
Accounts receivable, net
934,984
1,308,051
1,211,347
Inventories
1,402,858
1,293,912
1,381,513
Short-term investments
700,000
—
—
Other current assets
513,049
444,886
405,205
Current assets of discontinued
operations
565,135
611,139
431,908
Total current assets
6,261,137
5,027,016
3,990,855
Property, plant and equipment,
net
957,309
954,406
826,570
Goodwill and intangible assets,
net
3,018,370
3,010,564
3,412,019
Operating lease right-of-use
assets
1,354,308
1,273,514
1,246,985
Other assets
887,921
867,751
735,275
Other assets of discontinued
operations
—
—
190,260
Total assets
$
12,479,045
$
11,133,251
$
10,401,964
LIABILITIES AND STOCKHOLDERS'
EQUITY
Current liabilities
Short-term borrowings
$
19,256
$
1,228,812
$
67,658
Current portion of long-term debt
1,025
1,018
5,068
Accounts payable
348,932
407,021
507,575
Accrued liabilities
1,254,967
1,260,252
1,254,417
Current liabilities of discontinued
operations
91,283
126,781
112,427
Total current liabilities
1,715,463
3,023,884
1,947,145
Long-term debt
5,609,792
2,608,269
2,126,835
Operating lease liabilities
1,104,500
1,020,651
1,011,582
Other liabilities
1,136,692
1,123,113
1,139,512
Other liabilities of discontinued
operations
—
—
25,276
Total liabilities
9,566,447
7,775,917
6,250,350
Stockholders' equity
2,912,598
3,357,334
4,151,614
Total liabilities and stockholders'
equity
$
12,479,045
$
11,133,251
$
10,401,964
VF CORPORATION
Condensed Consolidated
Statements of Cash Flows
(Unaudited)
(In thousands)
Three Months Ended
June
2020
2019
Operating activities
Net income (loss)
$
(285,613
)
$
49,221
Loss from discontinued operations, net of
tax
(7,871
)
(16,052
)
Income (loss) from continuing operations,
net of tax
(277,742
)
65,273
Depreciation and amortization
63,026
62,236
Reduction in the carrying amount of
right-of-use assets
101,772
92,125
Other adjustments
102,490
(295,857
)
Cash used by operating activities -
continuing operations
(10,454
)
(76,223
)
Cash provided by operating activities -
discontinued operations
7,266
10,043
Cash used by operating activities
(3,188
)
(66,180
)
Investing activities
Purchases of short-term investments
(700,000
)
—
Capital expenditures
(69,191
)
(45,387
)
Software purchases
(13,477
)
(13,759
)
Other, net
(573
)
62,930
Cash provided (used) by investing
activities - continuing operations
(783,241
)
3,784
Cash used by investing activities -
discontinued operations
(1,914
)
(4,415
)
Cash used by investing activities
(785,155
)
(631
)
Financing activities
Net increase (decrease) from short-term
borrowings and long-term debt
1,765,041
(586,956
)
Cash dividends paid
(186,746
)
(202,538
)
Cash received from Kontoor Brands, net of
cash transferred of $126.8 million
—
906,148
Proceeds from issuance of Common Stock,
net of (payments) for tax withholdings
(15,634
)
7,199
Cash provided by financing activities
1,562,661
123,853
Effect of foreign currency rate changes
on cash, cash equivalents and restricted cash
4,126
5,078
Net change in cash, cash equivalents
and restricted cash
778,444
62,120
Cash, cash equivalents and restricted
cash – beginning of year
1,411,322
556,587
Cash, cash equivalents and restricted
cash – end of period
$
2,189,766
$
618,707
VF CORPORATION
Supplemental Financial
Information
Reportable Segment
Information
(Unaudited)
(In thousands)
Three Months Ended
June
% Change
% Change Constant
Currency(a)
% Change Adjusted(b)
% Change Constant Currency and
Adjusted(a)(b)
2020
2019
Segment revenues
Outdoor
$
341,228
$
610,620
(44)%
(43)%
(44)%
(43)%
Active
571,316
1,232,126
(54)%
(53)%
(54)%
(53)%
Work
162,430
201,646
(19)%
(18)%
(19)%
(18)%
Other (c)
1,319
6,262
*
*
*
*
Total segment revenues
$
1,076,293
$
2,050,654
(48)%
(47)%
(47)%
(47)%
Segment profit (loss)
Outdoor
$
(160,711)
$
(80,270)
Active
7,136
307,566
Work
(11,401)
15,471
Other (c)
(2,361)
(1,616)
Total segment profit (loss)
(167,337)
241,151
Corporate and other expenses
(117,659)
(139,632)
Interest, net
(27,949)
(15,583)
Income (loss) from continuing
operations before income taxes
$
(312,945)
$
85,936
(a) Refer to constant currency definition on the following pages.
(b) Excludes the operating results of
jeanswear wind down activities in South America post the separation
of Kontoor Brands for the three months ended June 2019. Refer to
Non-GAAP financial information on "Reconciliation of Select GAAP
Measures to Non-GAAP Measures - Three Months Ended June 2019" page
for additional information.
(c) Other is included for purposes of
reconciliation of revenues and profit, but it is not considered a
reportable segment. Includes results primarily related to the sale
of non-VF products.
* Calculation not meaningful
VF CORPORATION
Supplemental Financial
Information
Reportable Segment Information
– Constant Currency Basis
(Unaudited)
(In thousands)
Three Months Ended June
2020
As Reported
Adjust for Foreign
under GAAP
Currency Exchange
Constant Currency
Segment revenues
Outdoor
$
341,228
$
4,122
$
345,350
Active
571,316
9,035
580,351
Work
162,430
2,007
164,437
Other
1,319
57
1,376
Total segment revenues
$
1,076,293
$
15,221
$
1,091,514
Segment profit (loss)
Outdoor
$
(160,711
)
$
(1,458
)
$
(162,169
)
Active
7,136
872
8,008
Work
(11,401
)
72
(11,329
)
Other
(2,361
)
(1,281
)
(3,642
)
Total segment profit (loss)
(167,337
)
(1,795
)
(169,132
)
Corporate and other expenses
(117,659
)
(227
)
(117,886
)
Interest, net
(27,949
)
—
(27,949
)
Income (loss) from continuing
operations before income taxes
$
(312,945
)
$
(2,022
)
$
(314,967
)
Constant Currency Financial
Information
VF is a global company that reports
financial information in U.S. dollars in accordance with GAAP.
Foreign currency exchange rate fluctuations affect the amounts
reported by VF from translating its foreign revenues and expenses
into U.S. dollars. These rate fluctuations can have a significant
effect on reported operating results. As a supplement to our
reported operating results, we present constant currency financial
information, which is a non-GAAP financial measure that excludes
the impact of translating foreign currencies into U.S. dollars. We
use constant currency information to provide a framework to assess
how our business performed excluding the effects of changes in the
rates used to calculate foreign currency translation. Management
believes this information is useful to investors to facilitate
comparison of operating results and better identify trends in our
businesses.
To calculate foreign currency translation
on a constant currency basis, operating results for the current
year period for entities reporting in currencies other than the
U.S. dollar are translated into U.S. dollars at the average
exchange rates in effect during the comparable period of the prior
year (rather than the actual exchange rates in effect during the
current year period).
These constant currency performance
measures should be viewed in addition to, and not in lieu of or
superior to, our operating performance measures calculated in
accordance with GAAP. The constant currency information presented
may not be comparable to similarly titled measures reported by
other companies.
VF CORPORATION
Supplemental Financial
Information
Reconciliation of Select GAAP
Measures to Non-GAAP Measures - Three Months Ended June
2020
(Unaudited)
(In thousands, except per
share amounts)
Three Months Ended June 2020
As Reported under
GAAP
Transaction and Deal Related
Costs(a)
Specified Strategic Business
Decisions(b)
Adjusted
Revenues
$
1,076,293
$
—
$
—
$
1,076,293
Gross profit
569,342
410
13,017
582,769
Percent
52.9
%
54.1
%
Operating income (loss)
(246,809)
410
15,969
(230,430)
Percent
(22.9)
%
(21.4)
%
Diluted earnings (loss) per share from
continuing operations (c)
(0.71)
—
0.14
(0.57)
(a) Transaction and deal related costs
include expenses associated with the anticipated sale of the
Occupational Workwear business of $0.4 million, that did not meet
the criteria for discontinued operations, for the three months
ended June 2020.
(b) Specified strategic business decisions
for the three months ended June 2020 include costs associated with
jeanswear wind down activities in South America post the separation
of Kontoor Brands and costs related to specified strategic business
decisions to cease operations in Argentina and planned business
model changes in certain other countries in South America, which
totaled $2.9 million for the three months ended June 2020. The
costs also include $13.0 million during the three months ended June
2020 for cost optimization activity indirectly related to the
strategic review of the Occupational Workwear business. The three
months ended June 2020 also include a $42.4 million noncash charge
recorded in the 'Other income (expense), net' line related to the
release of certain currency translation amounts associated with the
wind down activities in South America. The specified business
decisions costs resulted in a net tax benefit of $1.9 million in
the three months ended June 2020.
(c) Amounts shown in the table have been
calculated using unrounded numbers. The diluted earnings per share
impacts were calculated using 390,791,000 weighted average common
shares for the three months ended June 2020.
Non-GAAP Financial Information
The financial information above has been
presented on a GAAP basis and on an adjusted basis, which excludes
the impact of transaction and deal related costs and activity
related to specified strategic business decisions. The adjusted
presentation provides non-GAAP measures. Management believes these
measures provide investors with useful supplemental information
regarding VF's underlying business trends and the performance of
VF's ongoing operations and are useful for period-over-period
comparisons of such operations.
Management uses the above financial
measures internally in its budgeting and review process and, in
some cases, as a factor in determining compensation. While
management believes that these non-GAAP financial measures are
useful in evaluating the business, this information should be
considered as supplemental in nature and should be viewed in
addition to, and not in lieu of or superior to, VF's operating
performance measures calculated in accordance with GAAP. In
addition, these non-GAAP financial measures may not be the same as
similarly titled measures presented by other companies.
VF CORPORATION
Supplemental Financial
Information
Reconciliation of Select GAAP
Measures to Non-GAAP Measures - Three Months Ended June
2019
(Unaudited)
(In thousands, except per
share amounts)
Three Months Ended June 2019
As Reported under
GAAP
Transaction and Deal Related
Costs(a)
Relocation and Specified
Strategic Business Decisions(b)
Adjusted
Revenues
$
2,050,654
$
—
$
(4,315)
$
2,046,339
Gross profit
1,154,370
(667)
(2,168)
1,151,535
Percent
56.3
%
56.3
%
Operating income
95,965
12,840
16,953
125,758
Percent
4.7
%
6.1
%
Diluted earnings per share from
continuing operations (c)
0.16
0.02
0.03
0.22
(a) Transaction and deal related costs
include acquisition and integration costs related to the
acquisitions of the Icebreaker® and Altra® brands, which totaled
$3.3 million for the three months ended June 2019. The costs also
include separation and related expenses associated with the
spin-off of the jeanswear business of $9.5 million, that did not
meet the criteria for discontinued operations, for the three months
ended June 2019. The transaction and deal related costs resulted in
a net tax benefit of $3.1 million in the three months ended June
2019.
(b) Relocation and other specified
strategic business decisions for the three months ended June 2019
include costs associated with the relocation of VF's global
headquarters and certain brands to Denver, Colorado, which totaled
$15.0 million for the three months ended June 2019. This activity
includes a gain of approximately $11 million on the sale of certain
office real estate and related assets in connection with the
relocation. The activity also reflects costs related to specified
strategic business decisions to cease operations in Argentina and
planned business model changes in certain other countries in South
America as well as the operating results of jeanswear wind down
activities in South America post the separation of Kontoor Brands,
which totaled $2.0 million for the three months ended June 2019.
The relocation and specified strategic business decisions costs
results in a net tax benefit of $4.1 million for the three months
ended June 2019.
(c) Amounts shown in the table have been
calculated using unrounded numbers. The diluted earnings per share
impact was calculated using 401,914,000 weighted average common
shares for the three months ended June 2019.
Non-GAAP Financial Information
The financial information above has been
presented on a GAAP basis and on an adjusted basis, which excludes
the impact of transaction and deal related costs and relocation and
specified strategic business decisions. The adjusted presentation
provides non-GAAP measures. Management believes these measures
provide investors with useful supplemental information regarding
VF's underlying business trends and the performance of VF's ongoing
operations and are useful for period-over-period comparisons of
such operations.
Management uses the above financial
measures internally in its budgeting and review process and, in
some cases, as a factor in determining compensation. While
management believes that these non-GAAP financial measures are
useful in evaluating the business, this information should be
considered as supplemental in nature and should be viewed in
addition to, and not in lieu of or superior to, VF's operating
performance measures calculated in accordance with GAAP. In
addition, these non-GAAP financial measures may not be the same as
similarly titled measures presented by other companies.
VF CORPORATION
Supplemental Financial
Information
Top 4 Brand Revenue
Information
(Unaudited)
Three Months Ended June
2020
Top 4 Brand Revenue Growth
Americas
EMEA
APAC
Global
Vans®
% change
(64)%
(47)%
(3)%
(52)%
% change constant currency*
(64)%
(46)%
1%
(51)%
The North Face®
% change
(54)%
(41)%
(9)%
(45)%
% change constant currency*
(54)%
(40)%
(6)%
(44)%
Timberland®
% change
(44)%
(50)%
(27)%
(43)%
% change constant currency*
(44)%
(50)%
(26)%
(43)%
Dickies®
% change
(16)%
(37)%
(2)%
(16)%
% change constant currency*
(15)%
(35)%
1%
(15)%
*Refer to constant currency definition on
previous pages.
VF CORPORATION
Supplemental Financial
Information
Geographic and Channel Revenue
Information
(Unaudited)
Three Months Ended June
2020
% Change
% Change Constant
Currency*
% Change Adjusted(a)
% Change Constant Currency and
Adjusted*(a)
Geographic
Revenue Growth
U.S.
(54)%
(54)%
(54)%
(54)%
EMEA
(48)%
(47)%
(48)%
(47)%
APAC
(12)%
(9)%
(12)%
(9)%
Greater China
0%
3%
0%
3%
Americas (non-U.S.)
(71)%
(69)%
(70)%
(68)%
International
(39)%
(37)%
(39)%
(37)%
Global
(48)%
(47)%
(47)%
(47)%
Three Months Ended June
2020
% Change
% Change Constant
Currency*
% Change Adjusted(a)
% Change Constant Currency and
Adjusted*(a)
Channel Revenue
Growth
Wholesale (b)
(55)%
(54)%
(55)%
(54)%
Direct-to-consumer
(37)%
(37)%
(37)%
(36)%
Digital
78%
81%
78%
81%
As of June
2020
2019
DTC Store
Count
Total
1,376
1,386
*Refer to constant currency definition on
previous pages.
(a) Excludes the operating results of
jeanswear wind down activities in South America post the separation
of Kontoor Brands for the three months ended June 2019. Refer to
Non-GAAP financial information on "Reconciliation of Select GAAP
Measures to Non-GAAP Measures - Three Months Ended June 2019" page
for additional information.
(b) Royalty revenues are included in the
wholesale channel for all periods.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200731005084/en/
VF Corporation Joe Alkire,
720-778-4051 Vice President, Corporate Development, Investor
Relations and Treasury or Craig Hodges, 720-778-4116 Vice
President, Corporate Affairs
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