- Full year fiscal 2019 revenue from
continuing operations increased 12 percent (up 13 percent in
constant dollars) to $13.8 billion; excluding acquisitions net of
divestitures, revenue increased 7 percent (up 8 percent in constant
dollars);
- Full year fiscal 2019 Active segment
revenue increased 16 percent (up 18 percent in constant dollars)
including a 24 percent (26 percent in constant dollars) increase in
Vans® brand revenue; Outdoor segment revenue
increased 9 percent (up 10 percent in constant dollars) including a
9 percent (10 percent in constant dollars) increase in The North
Face® brand revenue and a 5-percentage point revenue
growth contribution from acquisitions;
- Full year fiscal 2019 international
revenue increased 10 percent (up 13 percent in constant dollars)
including a 5-percentage point revenue growth contribution from
acquisitions net of divestitures; China revenue increased 22
percent (up 24 percent in constant dollars), including a
5-percentage point revenue growth contribution from
acquisitions;
- Full year fiscal 2019
direct-to-consumer revenue increased 14 percent (up 15 percent in
constant dollars) including a 3-percentage point revenue growth
contribution from acquisitions net of divestitures; Digital revenue
increased 32 percent (up 33 percent in constant dollars), including
an 8-percentage point revenue growth contribution from acquisitions
net of divestitures;
- Full year fiscal 2019 reported gross
margin from continuing operations increased 10 basis points to 50.7
percent. On an adjusted basis, gross margin increased 30 basis
points to 51.0 percent;
- Full year fiscal 2019 reported
earnings per share from continuing operations was $3.14. Adjusted
earnings per share from continuing operations increased 20 percent
to $3.78 (up 22 percent in constant dollars) including a $0.15 per
share contribution from acquisitions net of divestitures. Adjusted
earnings per share from continuing operations includes $20 million,
or $0.04 per share, of incremental investment relative to the
company's prior adjusted earnings per share outlook of $3.73
provided on January 18, 2019;
- Full year fiscal 2019 cash flow from
operations reached approximately $1.7 billion. On an adjusted
basis, cash flow from operations reached nearly $1.8
billion;
- Full year fiscal 2020 revenue is
expected to be in the range of $11.7 billion to $11.8 billion,
reflecting growth of approximately 5 percent to 6 percent compared
to historical results excluding Kontoor Brands, or approximately 7
percent to 8 percent on a constant dollar basis, excluding the
impact of acquisitions net of divestitures; and,
- Full year fiscal 2020 adjusted
earnings per share is expected to be in the range of $3.30 to
$3.35, reflecting estimated growth of 15 percent to 17 percent
compared to historical results excluding Kontoor Brands, or
approximately 17 percent to 19 percent on a constant dollar basis,
excluding the impact of acquisitions net of divestitures.
VF Corporation (NYSE: VFC) today reported financial results for
its fourth quarter and full year ended March 30, 2019. 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 -
Nautica® Brand Business and Licensing 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 Williamson-Dickie,
Icebreaker®, Altra®, Reef®, and Jeans Spin-Off Transaction and Deal
Related Expenses, Costs Related to Office Relocations and Other
Strategic Business Decisions, and the Provisional Impact of U.S.
Tax Legislation.” This release also refers to "Excluding Kontoor
Brands" amounts, a term that is described under the heading
"Separation of Kontoor Brands." Unless otherwise noted, “reported”
and “adjusted” amounts are the same.
“Fiscal 2019 marked one of the most significant periods of
transformation in VF's 120-year history, highlighted by our
announcement to spin off our Jeans business as an independent,
publicly traded company,” said Steve Rendle, Chairman, President
and Chief Executive Officer. “Despite the tremendous workload, we
remained sharply focused and delivered another year of strong
financial results and top quartile returns to our
shareholders."
Rendle continued, "As we enter fiscal 2020, our portfolio is
well positioned, and our growth and momentum are strong, fueled by
the investments we are making in support of our long-term strategy.
The bold decisions we continue to make to evolve our company
underpin the transformational journey we're on to deliver on our
commitment to be a purpose-led, performance-driven and
value-creating enterprise capable of delivering sustainable
long-term shareholder value.”
Separation of Kontoor Brands
As previously announced, on April 30, 2019, VF's Board of
Directors approved the separation of its Jeans business (the
“Separation”), which will be achieved through the distribution of
100 percent of the shares of Kontoor Brands, Inc. ("Kontoor
Brands") to holders of VF common stock on the record date of
May 10, 2019. VF stockholders of record will receive one share
of Kontoor Brands common stock for every seven shares of VF common
stock. The distribution is expected to be completed after the close
of the New York Stock Exchange today, May 22, 2019. Following the
Separation, Kontoor Brands will be an independent, publicly traded
company, and VF will retain no ownership interest in Kontoor
Brands. Kontoor Brands has received approval for the listing of its
common stock on the New York Stock Exchange under the symbol
“KTB.”
In the context of VF's review of historical results, this
release refers to "excluding Kontoor Brands" amounts, which exclude
the historical results of VF’s Jeans reportable segment, Wrangler®
RIGGS brand (included in the Work reportable segment) and VF
OutletTM business (included in the Other category presented in the
reconciliation of reportable segment results). The results are not
indicative of the results of Kontoor Brands as a standalone entity,
and are not representative of VF’s discontinued operations view of
consolidated results after the separation of Kontoor Brands is
complete.
In addition, the release provides adjusted fiscal 2020 outlook
information reflecting management’s best estimates of the impact
the separation of Kontoor Brands may have on VF’s fiscal 2019
financial information and fiscal 2020 outlook on a discontinued
operations basis, along with other adjustments. VF’s analysis of
the separation of Kontoor Brands has not been completed and is
subject to change.
In connection with a distribution date of May 22, 2019, VF will
file its Current Report on Form 8-K, no later than May 29, 2019,
which will include supplemental financial information on VF,
illustrating Kontoor Brands on a discontinued operations basis
under U.S. generally accepted accounting principles ("GAAP"), for
certain historical periods.
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 and on foreign currency-denominated transactions
in countries with highly inflationary economies. 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 - Nautica® Brand Business and
Licensing Business
On April 30, 2018, the company completed the sale of its
Nautica® brand business. On April 28, 2017, the company completed
the sale of its Licensed Sports Group ("LSG") business, including
the Majestic® brand. In conjunction with the LSG divestiture, VF
executed its plan to entirely exit the licensing business and
completed the sale of the assets of the JanSport® brand collegiate
business in the fourth quarter of 2017. Accordingly, the company
has included the operating results of these businesses in
discontinued operations through their respective dates of sale.
Adjusted Amounts - Excluding Williamson-Dickie,
Icebreaker®, Altra®, Reef®, and Jeans Spin-Off
Transaction and Deal Related Expenses, Costs Related to Office
Relocations and Other Strategic Business Decisions, and the
Provisional Impact of U.S. Tax Legislation
This release refers to adjusted amounts that exclude transaction
and deal related expenses associated with the acquisitions and
integration of Williamson-Dickie, Icebreaker® and Altra®, and
expenses and losses on sale related to the divestitures of the
Reef® brand and the Van Moer business, which was acquired in
connection with the Williamson-Dickie acquisition. The release also
refers to transaction expenses associated with the planned spin-off
of the Jeans business. Total transaction and deal related expenses,
including the losses on sale, were approximately $57 million in the
fourth quarter of fiscal 2019 and $191 million in fiscal 2019.
This release also refers to adjusted amounts that exclude costs
primarily associated with the previously announced relocations of
VF’s global headquarters and certain brands to Denver, Colorado.
The release also refers to costs related to strategic business
decisions to cease operations in Argentina and planned business
model changes in certain other countries in South America. Total
costs were approximately $61 million in the fourth quarter of
fiscal 2019 and $79 million in fiscal 2019.
Adjusted amounts in this release also exclude the provisional
amounts recorded due to recent U.S. tax legislation. On December
22, 2017, the U.S. government enacted comprehensive tax legislation
commonly referred to as the Tax Cuts and Jobs Act ("Tax Act").
Measurement period adjustments related to the provisional net
charge and subsequent adjustments related to published Tax Act
regulations resulted in a net expense of approximately $14 million
in the fourth quarter of fiscal 2019 and $37 million in fiscal
2019.
Combined, the above net charges negatively impacted earnings per
share by $0.28 during the fourth quarter of fiscal 2019 and $0.64
during fiscal 2019. All adjusted amounts referenced herein exclude
the effects of these amounts.
Adjusted cash flow from operations reflects the impact of the
cash-related acquisition, divestiture, integration, separation,
relocation and other strategic business decision costs paid in
fiscal 2019.
Reconciliations of measures calculated in accordance with GAAP
to adjusted amounts, which are considered non-GAAP measures, are
presented in the supplemental financial information included with
this release that identifies and quantifies all excluded items, and
provides management’s view of why this information is useful to
investors.
Fourth Quarter Fiscal 2019 Income Statement Review
- Revenue increased 6 percent (up
9 percent in constant dollars) to $3.2 billion, driven by VF's
largest brands, international and direct-to-consumer businesses, as
well as strength from the Active, Outdoor and Work segments.
Excluding Kontoor Brands, revenue increased 8 percent (up 12
percent in constant dollars).
- Gross margin declined 20 basis
points to 50.3 percent on a reported basis. On an adjusted basis,
gross margin increased 30 basis points, including a 70 basis point
negative impact from Kontoor Brands, to 51.1 percent.
- Operating income on a reported
basis was $194 million. On an adjusted basis, operating income
declined 5 percent to $313 million, including a $7 million
contribution from acquisitions net of divestitures. Excluding
Kontoor Brands, adjusted operating income increased 3 percent.
Operating margin on a reported basis declined 420 basis
points to 6.0 percent. Adjusted operating margin declined 110 basis
points, including a 70 basis point negative impact from Kontoor
Brands, to 9.7 percent.
- Earnings per share was $0.32 on
a reported basis. On an adjusted basis, earnings per share
declined 10 percent (4 percent in constant dollars) to $0.60,
including a $0.01 contribution from acquisitions net of
divestitures, and $0.04 per share ($20 million pretax) of
incremental investment relative to the company's prior outlook
provided on January 18, 2019.
Full Year Fiscal 2019 Income Statement Review
- Revenue increased 12 percent (up
13 percent in constant dollars) to $13.8 billion. Excluding
acquisitions net of divestitures, revenue increased 7 percent (up 8
percent in constant dollars), driven by VF's largest brands,
international and direct-to-consumer businesses, as well as
strength from the Active, Outdoor and Work segments. Excluding
Kontoor Brands, revenue increased 16 percent (up 18 percent in
constant dollars), or 10 percent (11 percent in constant dollars),
excluding acquisitions net of divestitures.
- Gross margin increased 10 basis
points to 50.7 percent on a reported basis. On an adjusted basis,
gross margin increased 30 basis points, including a 10 basis point
negative impact from Kontoor Brands, to 51.0 percent. Excluding
acquisitions net of divestitures, adjusted gross margin increased
70 basis points to 51.4 percent.
- Operating income on a reported
basis increased 10 percent to $1.7 billion. On an adjusted basis,
operating income increased 21 percent to $1.9 billion, including a
$73 million contribution from acquisitions net of divestitures.
Excluding Kontoor Brands, adjusted operating income increased 32
percent. Operating margin on a reported basis decreased 30
basis points to 12.1 percent. Adjusted operating margin increased
110 basis points, including a 50 basis point negative impact from
Kontoor Brands, to 13.8 percent.
- Earnings per share on a reported
basis increased 63 percent to $3.14. Adjusted earnings per share
increased 20 percent (up 22 percent in constant dollars) to $3.78,
including a $0.15 contribution from acquisitions net of
divestitures. Relative to the company's original outlook provided
on May 4, 2018, full year fiscal 2019 earnings per share included a
$0.13 (about $65 million pretax) impact from incremental
investments.
Balance Sheet and Cash Flow Highlights
Inventories were up 4 percent compared to March 2018 levels. In
fiscal year 2019, VF’s cash flow from operations reached
approximately $1.7 billion, or nearly $1.8 billion on an adjusted
basis. The company also returned more than $900 million to
shareholders through dividends and share repurchases.
Adjusted Full Year Fiscal 2020 Outlook
VF’s outlook for full year fiscal 2020 is on an adjusted
continuing operations basis unless otherwise noted, excludes
Kontoor Brands and includes the following:
- Revenue is expected to be in the
range of $11.7 billion to $11.8 billion, reflecting growth of
approximately 5 percent to 6 percent, or approximately 7 percent to
8 percent on a constant dollar basis excluding the impact of
acquisitions net of divestitures. By segment, revenue for
Outdoor is expected to increase approximately 4 percent to 5
percent, or approximately 5 percent to 6 percent on a constant
dollar basis, excluding the impact of acquisitions; revenue for
Active is expected to increase approximately 6 percent to 7
percent, or approximately 9 percent to 10 percent on a constant
dollar basis excluding the impact of divestitures; and, revenue for
Work is expected to increase approximately 3 percent to 5
percent, or approximately 4 percent to 6 percent on a constant
dollar basis, excluding the impact of divestitures.
- International revenue is
expected to increase approximately 4 percent to 6 percent, or
approximately 7 percent to 9 percent on a constant dollar basis,
excluding the impact of acquisitions net of divestitures. By
geographic region, European revenue is expected to increase
approximately 1 percent to 3 percent, or approximately 5 percent to
7 percent on a constant dollar basis, excluding the impact of
acquisitions net of divestitures. In the Asia Pacific region,
revenue is expected to increase approximately 12 percent to 14
percent, or approximately 14 percent to 16 percent on a constant
dollar basis. And, in the Americas (non-U.S.) region, revenue is
expected to increase approximately 2 percent to 4 percent, or
approximately 3 percent to 5 percent on a constant dollar basis.
Revenue growth in the Americas (non-U.S.) region is expected to be
negatively impacted by approximately 6 percentage points as a
result of planned strategic business model changes.
- Direct-to-consumer revenue is
expected to increase approximately 9 percent to 11 percent, or
approximately 10 percent to 12 percent on a constant dollar basis,
including 25 percent growth in digital.
- Adjusted gross margin is
expected to approach 54.0 percent, which represents an estimated
increase of approximately 60 basis points.
- Adjusted operating margin is
expected to be 13.7 percent, which represents an estimated increase
of approximately 60 basis points.
- Adjusted earnings per share is
expected to be in the range of $3.30 to $3.35, reflecting estimated
growth of approximately 15 percent to 17 percent, or approximately
17 percent to 19 percent on a constant dollar basis, excluding the
impact of acquisitions net of divestitures.
- Adjusted cash flow from
operations is expected to be at least $1.3 billion.
- Other full year assumptions include an
effective tax rate in the range of 15 percent to 15.5
percent and capital expenditures of just under $400
million.
Dividend Declared
VF’s Board of Directors declared a quarterly dividend of $0.51
per share, payable on June 20, 2019, to shareholders of record on
June 10, 2019.
Webcast Information
VF will host its fourth quarter fiscal 2019 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 fourth quarter fiscal 2019 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
VF Corporation (NYSE: VFC) outfits consumers around the world
with its diverse portfolio of iconic lifestyle brands, including
Vans®, The North Face®, Timberland®, Wrangler® and Lee®. Founded in
1899, VF is one of the world’s largest apparel, footwear and
accessories companies with socially and environmentally responsible
operations spanning numerous geographies, product categories and
distribution channels. VF is committed to delivering innovative
products to consumers and creating long-term value for its
customers and shareholders. For more information, visit
www.vfc.com.
Forward-looking Statements
Certain statements included in this release and attachments 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. 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. 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 in this release include,
but are not limited to: risks associated with the proposed spin-off
of our Jeanswear business, including the risk that the spin-off
will not be consummated within the anticipated time period or at
all; the risk of disruption to our business in connection with the
proposed spin-off and that we could lose revenue as a result of
such disruption; the risk that the companies resulting from the
spin-off do 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; 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 both
businesses; and the risk that the combined value of the common
stock of the two publicly-traded companies will not be equal to or
greater than the value of VF Corporation common stock had the
spin-off not occurred. There are also risks associated with the
relocation of our global headquarters and a number of brands to the
metro Denver area, including the risk of significant disruption to
our operations, the temporary diversion of management resources and
loss of key employees who have substantial experience and expertise
in our business, the risk that we may encounter difficulties
retaining employees who elect to transfer and attracting new talent
in the Denver area to replace our employees who are unwilling to
relocate, the risk that the relocation may involve significant
additional costs to us and that the expected benefits of the move
may not be fully realized. Other risks include foreign currency
fluctuations; the level of consumer demand for apparel, footwear
and accessories; disruption to VF’s distribution system; VF's
reliance on a small number of large customers; 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; 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; 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 pending
exit of the United Kingdom from the European Union ("Brexit") or
any other similar referendums that may be held; and adverse or
unexpected weather conditions. 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 Securities and
Exchange Commission, including VF's Annual Report on Form 10-K and
Quarterly Reports on Form 10-Q.
VF CORPORATION Condensed Consolidated Statements
of Income (Unaudited) (In thousands, except per share
amounts) Three Months
Ended March % Twelve
Months Ended March % 2019
2018 (a)
Change 2019
2018 (a)
Change Net revenues $ 3,212,969 $ 3,045,446
6 % $ 13,848,660 $ 12,356,283 12 %
Costs
and operating expenses Cost of goods sold 1,595,431 1,506,335 6
% 6,827,481 6,107,671 12 % Selling, general and administrative
expenses 1,423,154 1,229,046 16 % 5,345,339
4,718,725 13 % Total costs and operating expenses 3,018,585
2,735,381 10 % 12,172,820 10,826,396 12
%
Operating income 194,384 310,065 (37 )% 1,675,840
1,529,887 10 %
Interest, net (12,181 ) (21,165 ) (42 )%
(85,425 ) (86,857 ) (2 )%
Other income (expense), net (6,516
) 5,233 * (63,011 ) (1,799 ) *
Income from continuing
operations before income taxes 175,687 294,133 (40 )% 1,527,404
1,441,231 6 %
Income taxes 46,883 32,969 42 %
268,400 672,134 (60 )%
Income from continuing
operations 128,804 261,164 (51 )% 1,259,004 769,097 64 %
Income (loss) from discontinued operations, net of tax —
(8,371 ) * 788 (110,544 ) *
Net income $
128,804 $ 252,793 (49 )% $ 1,259,792 $ 658,553
91 %
Earnings (loss) per common share - basic
(b) Continuing operations $ 0.33 $ 0.66 (51 )% $ 3.19 $ 1.95
64 % Discontinued operations — (0.02 ) * — (0.28 ) *
Total earnings per common share - basic $ 0.33 $ 0.64
(49 )% $ 3.19 $ 1.67 91 %
Earnings (loss)
per common share - diluted (b) Continuing operations $
0.32 $ 0.65 (51 )% $ 3.14 $ 1.92 63 % Discontinued operations —
(0.02 ) * — (0.28 ) *
Total earnings per common
share - diluted $ 0.32 $ 0.63 (49 )% $ 3.15
$ 1.65 91 %
Weighted average shares
outstanding Basic 395,405 395,253 395,189 395,038 Diluted
400,731 401,276 400,496 399,888
Cash dividends per common
share $ 0.51 $ 0.46 11 % $ 1.94 $ 1.76 10 % *
Calculation not meaningful
Basis of presentation of condensed consolidated financial
statements: VF operates and reports using a 52/53 week fiscal
year. In connection with the change in fiscal year end to the
Saturday closest to March 31 from the Saturday closest to December
31, VF's current fiscal year ran from April 1, 2018 through March
30, 2019 ("fiscal 2019"). For presentation purposes herein, all
references to periods ended March 2019 relate to the 13-week and
52-week fiscal periods ended March 30, 2019 and all references to
periods ended March 2018 relate to the 13-week and 52-week periods
ended March 31, 2018.
(a) In the first quarter of fiscal 2019, VF adopted ASU 2017-07,
"Compensation - Retirement Benefits (Topic 715): Improving the
Presentation of Net Periodic Pension Cost and Net Periodic
Postretirement Benefit Costs" and restated the prior periods to
conform to current year presentation. For the three months ended
March 2018, operating income decreased and other income (expense),
net increased by $1.3 million. For the twelve months ended March
2018, operating income increased and other income (expense), net
decreased by $5.1 million.
(b) Amounts have been calculated using unrounded numbers.
VF CORPORATION Condensed Consolidated Balance
Sheets (Unaudited) (In thousands)
March March 2019
2018 ASSETS Current assets Cash and
equivalents $ 543,011 $ 680,762 Accounts receivable, net 1,708,796
1,408,587 Inventories 1,943,030 1,861,441 Other current assets
478,620 732,533 Total current assets 4,673,457 4,683,323
Property, plant and equipment 1,057,268 1,011,617
Goodwill and intangible assets 3,779,161 3,813,329
Other
assets 846,899 803,041
Total assets $ 10,356,785 $
10,311,310
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities Short-term borrowings $ 665,055 $
1,525,106 Current portion of long-term debt 5,263 6,265 Accounts
payable 694,733 583,004 Accrued and other current liabilities
1,296,553 1,024,454 Total current liabilities 2,661,604 3,138,829
Long-term debt 2,115,884 2,212,555
Other liabilities
1,280,781 1,271,830
Total liabilities 6,058,269 6,623,214
Stockholders' equity 4,298,516 3,688,096
Total
liabilities and stockholders' equity $ 10,356,785 $ 10,311,310
VF CORPORATION Condensed Consolidated
Statements of Cash Flows (Unaudited) (In
thousands) Twelve Months
Ended March
2019 (a)
2018 (a)
Operating activities Net income $ 1,259,792 $ 658,553
Impairment of goodwill — 104,651 Depreciation and amortization
301,005 295,597 Other adjustments 103,426 382,798
Cash provided by operating activities 1,664,223 1,441,599
Investing activities Business acquisitions, net of cash
received (320,405 ) (740,541 ) Proceeds from sale of businesses,
net of cash sold 430,286 214,968 Capital expenditures (250,634 )
(183,071 ) Software purchases (56,207 ) (63,809 ) Other, net
(23,672 ) 8,549 Cash used by investing activities (220,632 )
(763,904 )
Financing activities Net (decrease) increase from
short-term borrowings, long-term debt and other (872,564 ) 965,311
Purchases of treasury stock (150,676 ) (1,012,341 ) Cash dividends
paid (767,061 ) (693,339 ) Proceeds from issuance of Common Stock,
net of shares withheld for taxes 199,296 130,627 Cash
used by financing activities (1,591,005 ) (609,742 )
Effect of
foreign currency rate changes on cash, cash equivalents and
restricted cash 14,811 12,957
Net change in
cash, cash equivalents and restricted cash (132,603 ) 80,910
Cash, cash equivalents and restricted cash - beginning of
period 689,190 608,280
Cash, cash equivalents
and restricted cash - end of period $ 556,587 $ 689,190
(a) The cash flows related to discontinued operations have not
been segregated, and are included in the Condensed Consolidated
Statements of Cash Flows.
VF CORPORATION Supplemental Financial
Information Reportable Segment Information
(Unaudited) (In thousands)
Three Months Ended March
%
ChangeConstantCurrency (a)
% ChangeOrganic
(b)
% ChangeConstantCurrency
andOrganic (a) (b)
2019 2018 % Change Segment
revenues Outdoor $ 1,001,316 $ 888,039 13 % 17 % 5 % 9 % Active
1,142,314 1,071,598 7 % 10 % 12 % 16 % Work 453,001 442,258 2 % 4 %
6 % 7 % Jeans 597,253 623,266 (4 )% (1 )% (4 )% (1 )% Other (c)
19,085 20,285 (6 )% (6 )% (6 )% (6 )% Total segment
revenues $ 3,212,969 $ 3,045,446 6 % 9 % 6 % 9 %
Segment profit (loss) Outdoor $ 31,790 $ 44,673 (29
)% (21 )% Active 232,599 237,620 (2 )% 1 % Work 45,018 40,024 12 %
13 % Jeans 47,991 103,805 (54 )% (65 )% Other (c) (2,091 ) (3,074 )
32 % 32 % Total segment profit 355,307 423,048 (16 )% (16 )%
Corporate and other expenses (167,439 ) (107,750 ) 55 % 56 %
Interest, net (12,181 ) (21,165 ) (42 )% (42 )%
Income from continuing operations
before income taxes
$ 175,687 $ 294,133 (40 )% (41 )%
The business segment information provided above reflects changes
in VF's operating structure during the first quarter of fiscal
2019. These changes have been made to all periods presented and had
no impact on VF's consolidated results of operations.
(a) Refer to constant currency definition on the following
pages.
(b) Excludes acquisitions representing the operating results of
Icebreaker® and Altra® for the three months ended March 2019. The
change also excludes divestitures representing the operating
results of Reef® and the Van Moer business for the three months
ended March 2018. Refer to Non-GAAP financial information on
"Reconciliation of Select Non-GAAP Measures - Three and Twelve
Months Ended March 2019" and "Reconciliation of Select Non-GAAP
Measures - Three and Twelve Months Ended March 2018" pages for
additional information.
(c) Other is included for purposes of reconciliation of revenues
and profit, but it is not considered a reportable segment. Includes
sales of non-VF products at VF Outlet™ stores and results from
transition services related to the sale of the Nautica® and Reef®
brand businesses.
VF CORPORATION Supplemental Financial
Information Reportable Segment Information
(Unaudited) (In thousands)
Twelve Months Ended March
%
ChangeConstantCurrency (a)
% ChangeOrganic
(b)
% ChangeConstantCurrency
andOrganic (a) (b)
2019 2018 % Change Segment
revenues Outdoor $ 4,649,024
$
4,261,945
9 % 10 % 4 % 5 % Active 4,721,792
4,054,487
16 % 18 % 18 % 19 % Work 1,862,017
1,342,004
39 % 39 % 6 % 6 % Jeans 2,491,769
2,586,559
(4 )% (2 )% (4 )% (2 )% Other (c) 124,058
111,288
11 % 11 % 11 % 11 % Total segment revenues $ 13,848,660
$
12,356,283
12 % 13 % 7 % 8 %
Segment profit (loss)
Outdoor $ 544,425
$
508,760
7 % 9 % Active 1,125,709
894,212
26 % 27 % Work 220,670
165,952
33 % 33 % Jeans 300,502
395,822
(24 )% (28 )% Other (c) 457
(3,969
)
* * Total segment profit 2,191,763
1,960,777
12 % 12 %
Corporate and other expenses
(578,934
)
(432,689
)
34 % 34 %
Interest, net
(85,425
)
(86,857
)
(2 )% (2 )%
Income from continuing operations before income
taxes $ 1,527,404
$
1,441,231
6 % 6 %
The business segment information provided above reflects changes
in VF's operating structure during the first quarter of fiscal
2019. These changes have been made to all periods presented and had
no impact on VF's consolidated results of operations.
(a) Refer to constant currency definition on the following
pages.
(b) Excludes acquisitions representing the operating results of
Icebreaker® and Altra® for the twelve months ended March 2019 and
the operating results of Williamson-Dickie for the six months ended
September 2018. The change also excludes divestitures representing
the operating results of Reef® and the Van Moer business, through
the respective dates of sale for the three months ended December
2018, and for the six months ended March 2018. Refer to Non-GAAP
financial information on "Reconciliation of Select Non-GAAP
Measures - Three and Twelve Months Ended March 2019" and
"Reconciliation of Select Non-GAAP Measures - Three and Twelve
Months Ended March 2018" pages for additional information.
(c) Other is included for purposes of reconciliation of revenues
and profit, but it is not considered a reportable segment. Includes
sales of non-VF products at VF Outlet™ stores and results from
transition services related to the sale of the Nautica® and Reef®
brand businesses.
* Calculation not meaningful
VF CORPORATION Supplemental Financial
Information Reportable Segment Information – Constant
Currency Basis (Unaudited) (In thousands)
Three Months Ended March 2019
As Reported Adjust for Foreign
under GAAP Currency Exchange Constant
Currency Segment revenues Outdoor
$
1,001,316
$
36,902
$
1,038,218
Active 1,142,314 40,736 1,183,050 Work 453,001 5,219 458,220 Jeans
597,253 18,614 615,867 Other 19,085
—
19,085 Total segment revenues
$
3,212,969
$
101,471
$
3,314,440
Segment profit (loss) Outdoor
$
31,790
$
3,528
$
35,318
Active 232,599 7,623 240,222 Work 45,018 387 45,405 Jeans 47,991
(11,914
)
36,077 Other
(2,091
)
—
(2,091
)
Total segment profit 355,307 (376 354,931
Corporate and other
expenses (167,439
)
(474
)
(167,913
)
Interest, net (12,181
)
—
(12,181
)
Income from continuing operations before income taxes
$
175,687
$
(850
)
$
174,837
Diluted earnings per share growth
(51
)%
(50
)%
(101
)%
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 for its foreign
revenues and expenses in 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 and on foreign currency-denominated transactions
in countries with highly inflationary economies. 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, and measuring
foreign currency transactions in highly inflationary economies.
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).
Similarly, foreign currency transactions in highly inflationary
economies, on a constant currency basis, are calculated using
exchange rates from the comparable period of the prior year.
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 Reportable Segment Information – Constant
Currency Basis (Unaudited) (In thousands)
Twelve Months Ended March 2019
As Reported Adjust for Foreign
under GAAP Currency Exchange Constant
Currency Segment revenues Outdoor
$
4,649,024
$
59,504
$
4,708,528
Active 4,721,792 44,341 4,766,133 Work 1,862,017 6,685 1,868,702
Jeans 2,491,769 43,403 2,535,172 Other 124,058
— 124,058 Total segment revenues
$
13,848,660
$
153,933
$
14,002,593
Segment profit (loss) Outdoor
$
544,425
$
12,623
$
557,048
Active 1,125,709 6,200 1,131,909 Work 220,670 600 221,270 Jeans
300,502
(14,022
)
286,480 Other 457
—
457
Total segment profit 2,191,763 5,401 2,197,164
Corporate
and other expenses
(578,934
)
(590
)
(579,524
)
Interest, net
(85,425
)
—
(85,425
)
Income from continuing operations before income taxes
$
1,527,404
$
4,811
$
1,532,215
Diluted earnings per share growth
63
%
1
%
64
%
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 for its foreign
revenues and expenses in 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 and on foreign currency-denominated transactions
in countries with highly inflationary economies. 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, and measuring
foreign currency transactions in highly inflationary economies.
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).
Similarly, foreign currency transactions in highly inflationary
economies, on a constant currency basis, are calculated using
exchange rates from the comparable period of the prior year.
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 and Twelve Months
Ended March 2019 (Unaudited) (In thousands, except
per share amounts)
Three Months Ended March 2019
As Reportedunder GAAP
Transactionand
DealRelatedCosts (a)
Relocation andOther
StrategicBusiness Costs (b)
Impactof TaxAct
(c)
Adjusted
ContributionfromAcquisitions (d)
ContributionfromDivestitures (e)
AdjustedOrganic
Revenues
$
3,212,969
$
—
$
—
$
—
$
3,212,969
$
(66,439
)
$
—
$
3,146,530
Gross profit 1,617,538 8,722 14,125
—
1,640,385
(32,982
)
—
1,607,403
Percent
50.3
%
51.1
%
51.1
%
Operating income 194,384 56,923 61,257
—
312,564
(7,099
)
—
305,465
Percent
6.0
%
9.7
%
9.7
%
Other income (expense), net
(6,516
)
160
—
—
(6,356
)
6
—
(6,350
)
Diluted earnings per share from continuing operations
(f) 0.32 0.11 0.13
0.03
0.60
(0.01
)
—
0.59
Twelve Months Ended March 2019
As Reportedunder GAAP
Transactionand
DealRelatedCosts (a)
Relocation andOther
StrategicBusiness Costs (b)
Impactof TaxAct
(c)
Adjusted
ContributionfromAcquisitions (d)
ContributionfromDivestitures (e)
AdjustedOrganic
Revenues
$
13,848,660
$
—
$
—
$
—
$
13,848,660
$
(696,353
)
$
(3,855
)
$
13,148,452
Gross profit 7,021,179 28,307 17,637
—
7,067,123
(308,816
)
(1,322
)
6,756,985
Percent
50.7
%
51.0
%
51.4
%
Operating income 1,675,840 153,719 78,928
—
1,908,487
(73,849
)
857
1,835,495
Percent
12.1
%
13.8
%
14.0
%
Other income (expense), net
(63,011
)
37,012
—
—
(25,999
)
138
1
(25,860
)
Diluted earnings per share from continuing operations
(f) 3.14 0.38 0.17
0.09
3.78
(0.15
)
—
3.64
(a) Transaction and deal related costs include acquisition and
integration costs related to the acquisitions of Williamson-Dickie
and the Icebreaker® and Altra® brands, and divestiture costs
related to the sale of the Reef® brand, which totaled $8.3 million
and $41.9 million for the three and twelve months ended March 2019,
respectively. The costs also include separation and related
expenses associated with the planned spin-off of the Jeans business
of $48.7 million and $111.5 million for the three and twelve months
ended March 2019, respectively. Additionally, the costs include
non-operating losses on sale related to the divestitures of the
Reef® brand and Van Moer business, totaling $36.8 million in the
twelve months ended March 2019. The transaction and deal related
costs resulted in a net tax benefit of $13.4 million and $39.7
million in the three and twelve months ended March 2019,
respectively.
(b) Relocation and other strategic business costs for the three
and twelve months ended March 2019 include costs associated with
the relocation of VF’s global headquarters and certain brands to
Denver, Colorado, which totaled $30.7 million and $47.4 million for
the three and twelve months ended March 2019, respectively. The
costs also include those related to strategic business decisions to
cease operations in Argentina and planned business model changes in
certain other countries in South America, which totaled $30.5
million and $31.5 million for the three and twelve months ended
March 2019, respectively. The relocation and other strategic
business costs resulted in a net tax benefit of $7.9 million and
$12.2 million for the three and twelve months ended March 2019,
respectively.
(c) On December 22, 2017, the U.S. government enacted
comprehensive tax legislation commonly referred to as the Tax Cuts
and Jobs Act (“Tax Act”). Measurement period adjustments related to
the provisional net charge and subsequent adjustments related to
published Tax Act regulations were recorded during the three and
twelve months ended March 2019, resulting in net tax expense of
$13.9 million and $37.2 million, respectively.
(d) The contribution from acquisitions represents the operating
results of Williamson-Dickie through the one-year anniversary of
the acquisition, the operating results of Icebreaker® beginning on
the acquisition date of April 3, 2018 and the operating results of
Altra® beginning on the acquisition date of June 1, 2018. The
operating results of all acquisitions exclude transaction and deal
related costs. The contribution from acquisitions resulted in tax
expense of $2.1 million and $15.6 million for the three and twelve
months ended March 2019, respectively.
(e) The contribution from divestitures represents the operating
results of the Reef® brand and Van Moer business through the
respective dates of sale for the three months ending December 2018.
The operating results of all divestitures exclude transaction and
deal related costs. The contribution from divestitures resulted in
a tax benefit of $0.2 million for the twelve months ended March
2019.
(f) Amounts shown in the table have been calculated using
unrounded numbers. The diluted earnings per share impacts were
calculated using 400,731,000 and 400,496,000 weighted average
common shares for the three and twelve months ended March 2019,
respectively.
Non-GAAP Financial Information
The financial information above has been presented on a GAAP
basis, on an adjusted basis, which excludes the impact of
transaction and deal related costs, relocation and other strategic
business costs and the provisional impact of tax reform, and on an
adjusted organic basis, which excludes the operating results of
Williamson-Dickie (for the six months ended September 2018),
Icebreaker®, Altra®, Reef ® (for the three months ending December
2018) and the Van Moer business (for the three months ending
December 2018). Contribution from acquisitions and divestitures
also excludes transaction and deal related costs. These adjusted
presentations are 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 and Twelve Months Ended March 2018
(Unaudited) (In thousands, except per share amounts)
Three Months Ended March
2018
As Reportedunder GAAP
Transactionand DealRelatedCosts
(a)
Impact ofTax Act (b)
Adjusted
ContributionfromDivestitures
(c)
AdjustedOrganic
Revenues
$
3,045,446
$ — $ — $ 3,045,446 $ (66,016 ) $ 2,979,430
Gross
profit
1,539,111
6,492
—
1,545,603
(29,694
)
1,515,909
Percent
50.5
%
50.8
%
50.9
%
Operating income
310,065
18,605
—
328,670
(12,827
)
315,843
Percent
10.2
%
10.8
%
10.6
%
Diluted earnings per share from continuing operations
(d)
0.65
0.03
(0.01
)
0.67
(0.03
)
0.64
Twelve Months Ended March 2018
As Reportedunder GAAP
Transactionand DealRelatedCosts
(a)
Impact ofTax Act (b)
Adjusted
ContributionfromDivestitures
(c)
AdjustedOrganic
Revenues $ 12,356,283 $ —
$
—
$
12,356,283
$ (92,854 ) $ 12,263,429
Gross profit
6,248,612
10,127
—
6,258,739
(38,221
)
6,220,518
Percent
50.6
%
50.7
%
50.7
%
Operating income
1,529,887
44,470
—
1,574,357
(10,290
)
1,564,067
Percent
12.4
%
12.7
%
12.8
%
Diluted earnings per share from continuing operations
(d)
1.92
0.07
1.15
3.14
(0.02
)
3.12
(a) Transaction and deal related costs include acquisition and
integration costs related to the acquisition of Williamson-Dickie
and the Icebreaker® and Altra® brands, additional cost of goods
sold recognized by Williamson-Dickie due to fair value inventory
adjustments calculated as part of the purchase price accounting and
a non-operating net benefit from hedging the purchase price of
Icebreaker®. The transaction and deal related costs resulted in a
net tax benefit of $3.3 million and $6.9 million in the three and
twelve months ended March 2018, respectively.
(b) On December 22, 2017, the U.S. government enacted the Tax
Act. The transitional impact of the Tax Act resulted in a
provisional net charge of $465.5 million for the three months ended
December 2017. Measurement period adjustments related to the
provisional net charge were recorded during the three months ended
March 2018, resulting in a tax benefit of $5.1 million in the three
months ended March 2018 and a net charge of $460.4 million for the
twelve months ended March 2018.
(c) The contribution from divestitures represents the operating
results of the Reef® brand and Van Moer business for the three and
six months ending March 2018. The contribution from divestitures
resulted in a tax expense of $2.1 million and $1.8 million for the
three and twelve months ended March 2018.
(d) Amounts shown in the table have been calculated using
unrounded numbers. The diluted earnings per share impact was
calculated using 401,276,000 and 399,888,000 weighted average
common shares for the three and twelve months ended March 2018,
respectively.
Non-GAAP Financial Information
The financial information above has been presented on a GAAP
basis, on an adjusted basis which excludes the provisional impact
of tax reform and transaction and deal related expenses, and on an
adjusted organic basis, which excludes the operating results of
Reef ® and the Van Moer business (for the three and six months
ending March 2018). These adjusted presentations are 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 and Twelve Months Ended March 2019, VF
Excluding Kontoor Brands (Unaudited) (In thousands,
except per share amounts)
Three Months Ended March 2019
VF Adjusted (a)
KontoorBrands (b)
Kontoor Brands -Transaction
andDeal RelatedCosts, and OtherStrategicBusiness Costs
(c)
Kontoor Brands -Adjusted
VF AdjustedExcludingKontoor
BrandsAdjusted
Contribution fromAcquisitions
andDivestitures (d)
VF AdjustedOrganicExcludingKontoor
BrandsAdjusted
Revenues $ 3,212,969 $ (635,989 ) $ — $ (635,989 ) $
2,576,980 $ (66,439 ) $ 2,510,541
Gross profit
1,640,385
(246,113
)
(11,886
)
(257,999
)
1,382,386
(32,982
)
1,349,404
Percent
51.1
%
53.6
%
53.7
%
Operating income
312,564
(51,167
)
(31,498
)
(82,665
)
229,899
(7,099
)
222,800
Percent
9.7
%
8.9
%
8.9
%
Twelve Months Ended March 2019
VF Adjusted (a)
KontoorBrands (b)
Kontoor Brands -Transaction andDeal
RelatedCosts, and OtherStrategicBusiness Costs (c)
Kontoor Brands -Adjusted
VF AdjustedExcludingKontoor
BrandsAdjusted
Contribution fromAcquisitions
andDivestitures (d)
VF AdjustedOrganicExcludingKontoor
BrandsAdjusted
Revenues $ 13,848,660 $ (2,676,591 ) $ — $ (2,676,591 ) $
11,172,069 $ (700,208 ) $ 10,471,861
Gross profit
7,067,123
(1,082,735
)
(13,160
)
(1,095,895
)
5,971,228
(310,138
)
5,661,090
Percent
51.0
%
53.4
%
54.1
%
Operating income
1,908,487
(321,372
)
(54,704
)
(376,076
)
1,532,411
(72,992
)
1,459,419
Percent
13.8
%
13.7
%
13.9
%
(a) Excludes the impact of transaction and deal related costs,
relocation and other strategic business costs from VF's reported
gross profit and operating income. Refer to Non-GAAP financial
information on the "Reconciliation of Select Non-GAAP Measures -
Three and Twelve Months Ended March 2019" page for additional
information.
(b) Kontoor Brands includes historical results of VF's Jeans
reportable segment, Wrangler® RIGGS brand (included in the Work
reportable segment) and VF Outlet™ business (included in the Other
category presented in the reconciliation of reportable segment
results). The results shown above are not indicative of the results
for Kontoor Brands as a standalone entity or VF's discontinued
operations view of consolidated results after the separation of
Kontoor Brands is complete.
(c) Costs include separation and related expenses associated
with the planned spin-off of the Jeans business and costs related
to strategic business decisions to cease operations in Argentina
that were recorded by the Jeans business.
(d) The contribution from acquisitions represents the operating
results of Williamson-Dickie through the one-year anniversary of
the acquisition, the operating results of Icebreaker® beginning on
the acquisition date of April 3, 2018 and the operating results of
Altra® beginning on the acquisition date of June 1, 2018. The
contribution from divestitures represents the operating results of
the Reef® brand and Van Moer business through the respective dates
of sale for the three months ending December 2018. The operating
results of all acquisitions and divestitures exclude transaction
and deal related costs. Refer to Non-GAAP financial information on
the "Reconciliation of Select Non-GAAP Measures - Three and Twelve
Months Ended March 2019" page for additional information.
Non-GAAP Financial Information
The financial information above has been presented on an
adjusted basis, which excludes the impact of transaction and deal
related costs, relocation and other strategic business costs and
the results of Kontoor Brands, and on an adjusted organic basis,
which excludes the operating results of Williamson-Dickie (for the
six months ended September 2018), Icebreaker®, Altra®, Reef ® (for
the three months ending December 2018) and the Van Moer business
(for the three months ending December 2018). Contribution from
acquisitions and divestitures also excludes transaction and deal
related costs. These adjusted presentations are 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 and Twelve Months Ended March 2018, VF
Excluding Kontoor Brands (Unaudited) (In thousands,
except per share amounts)
Three Months
Ended March 2018
VF Adjusted (a)
KontoorBrands (b)
VF
AdjustedExcludingKontoor Brands
Contribution fromDivestitures
(c)
VF Adjusted OrganicExcluding
KontoorBrands
Revenues $ 3,045,446 $ (659,832 ) $ 2,385,614 $ (66,016 )
2,319,598
Gross profit
1,545,603
(290,779
)
1,254,824
(29,694
)
1,225,130
Percent
50.8
%
52.6
%
52.8
%
Operating income
328,670
(106,265
)
222,405
(12,827
)
209,578
Percent
10.8
%
9.3
%
9.0
%
Twelve Months Ended March 2018
VF Adjusted (a)
KontoorBrands (b)
VF AdjustedExcludingKontoor
Brands
Contribution fromDivestitures
(c)
VF Adjusted OrganicExcluding
KontoorBrands
Revenues $ 12,356,283 $ (2,762,879 ) $ 9,593,404 $ (92,854 )
9,500,550
Gross profit
6,258,739
(1,170,176
)
5,088,563
(38,221
)
5,050,342
Percent
50.7
%
53.0
%
53.2
%
Operating income
1,574,357
(410,363
)
1,163,994
(10,290
)
1,153,704
Percent
12.7
%
12.1
%
12.1
%
(a) Excludes the impact of transaction and deal related costs,
relocation and other strategic business costs from VF's reported
gross profit and operating income. Refer to Non-GAAP financial
information on the "Reconciliation of Select Non-GAAP Measures -
Three and Twelve Months Ended March 2018" page for additional
information.
(b) Kontoor Brands includes historical results of VF's Jeans
reportable segment, Wrangler® RIGGS brand (included in the Work
reportable segment) and VF Outlet™ business (included in the Other
category presented in the reconciliation of reportable segment
results). The results shown above are not indicative of the results
for Kontoor Brands as a standalone entity or VF's discontinued
operations view of consolidated results after the separation of
Kontoor Brands is complete. Note: there were no adjustments to
Kontoor Brands in the three or twelve months ended March 2018.
(c) The contribution from divestitures represents the operating
results of the Reef® brand and Van Moer business for the three and
six months ending March 2018. Refer to Non-GAAP financial
information on the "Reconciliation of Select Non-GAAP Measures -
Three and Twelve Months Ended March 2018" page for additional
information.
Non-GAAP Financial Information
The financial information above has been presented on an
adjusted basis which excludes transaction and deal related expenses
and the results of Kontoor Brands, and on an adjusted organic
basis, which excludes the operating results of Reef ® and the Van
Moer business (for the three and six months ending March 2018).
These adjusted presentations are 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 5 Brand Revenue Information
(Unaudited)
Three Months Ended March 2019 Twelve Months
Ended March 2019 Top 5 Brand Revenue Growth
Americas EMEA APAC Global
Americas EMEA APAC Global
Vans®
% change
21 % 2 % 8 % 14 % 30 % 10 % 25 % 24 %
% change constant
currency*
22 % 10 % 13 % 18 % 30 % 12 % 26 % 26 %
The North
Face®
% change
10 % 5 % 8 % 8 % 8 % 11 % 13 % 9 %
% change constant
currency*
10 % 14 % 13 % 11 % 8 % 14 % 16 % 10 %
Timberland®
% change
6 % (3 )% 2 % 1 % 4 % (2 )% (2 )% 0 %
% change constant
currency*
7 % 5 % 6 % 6 % 4 % 0 % 0 % 2 %
Wrangler®
% change
3 % (11 )% (9 )% 0 % 1 % (9 )% (8 )% (1 )%
% change constant
currency*
4 % (3 )% 0 % 3 % 2 % (6 )% (1 )% 1 %
Lee®
% change
(7 )% (18 )% (1 )% (8 )% (8 )% (9 )% 0 % (7 )%
% change constant
currency*
(6 )% (11 )% 5 % (4 )% (7 )% (6 )% 3 % (5 )% *Refer to
constant currency definition on previous pages.
VF
CORPORATION Supplemental Financial Information
Geographic and Channel Revenue Information
(Unaudited)
Three Months Ended March 2019 Twelve Months Ended March
2019 % Change
%
ChangeConstantCurrency*
% ChangeOrganic
(a)
% ChangeConstantCurrency
andOrganic*(a)
% Change
%
ChangeConstantCurrency*
% ChangeOrganic
(a)
% ChangeConstantCurrency
andOrganic*(a)
Geographic Revenue Growth U.S. 8
% 8 % 8 % 8 %
13% 13 % 9 % 9 %
EMEA (1 )% 8 % 0 % 8 % 8% 10 % 4 % 6 % APAC 6 % 11 % 4 % 9 % 15% 17
% 8 % 10 % China 14 % 20 % 14 % 20 % 22% 24 % 17 % 20 % Americas
(non-U.S.) 13 % 21 % 11 % 19 % 14% 21 % 4 % 11 %
International 3 % 10 % 2
% 10 % 10% 13 % 5
% 8 % Global 6 % 9
% 6 % 9 % 12% 13
% 7 % 8 % Three
Months Ended March 2019 Twelve Months Ended March 2019
% Change
%
ChangeConstantCurrency*
% ChangeOrganic
(a)
% ChangeConstantCurrency
andOrganic*(a)
% Change
%
ChangeConstantCurrency*
% ChangeOrganic
(a)
% ChangeConstantCurrency
andOrganic*(a)
Channel Revenue Growth Wholesale
(b) 5 % 8 % 5 %
9 % 11% 13 % 6 %
7 % Direct-to-Consumer 8 %
11 % 6 % 9 % 14%
15 % 11 % 12 %
Digital 21 % 24 % 17
% 20 % 32% 33 % 24
% 25 % As of March
2019 (c)
2018 DTC Store Count Total
1,551 1,483 *Refer to constant currency
definition on previous pages.
(a) Excludes acquisitions representing the operating results of
Icebreaker® and Altra® for the three and twelve months ended March
2019 and the operating results of Williamson-Dickie for the six
months ended September 2018. The change also excludes divestitures
representing the operating results of Reef® and the Van Moer
business, through the respective dates of sale for the three months
ended December 2018, and for the three and six months ended March
2018. Refer to Non-GAAP financial information on "Reconciliation of
Select Non-GAAP Measures - Three and Twelve Months Ended March
2019" and "Reconciliation of Select Non-GAAP Measures - Three and
Twelve Months Ended March 2018" pages for additional
information.
(b) Royalty revenues are included in the wholesale channel for
all periods.
(c) The March 2019 DTC store count includes 34 Icebreaker® and
Altra® stores.
VF CORPORATION Supplemental Financial
Information Geographic and Channel Revenue Information, VF
Excluding Kontoor Brands (Unaudited)
Three Months Ended March 2019
Twelve Months Ended March 2019 % Change
%
ChangeConstantCurrency*
% ChangeOrganic
(a)
% ChangeConstantCurrency
andOrganic*(a)
% Change
%
ChangeConstantCurrency*
% ChangeOrganic
(a)
% ChangeConstantCurrency
andOrganic*(a)
Geographic Revenue Growth
(b)
U.S. 11 % 11 % 12
% 12 % 19% 19 % 13
% 13 % EMEA 2 % 10 % 2 % 10 % 10% 12 % 6 % 8 %
APAC 9 % 13 % 5 % 10 % 19% 20 % 11 % 12 % China 19 % 25 % 19 % 25 %
29% 31 % 22 % 25 % Americas (non-U.S.) 18 % 24 % 15 % 22 % 23% 28 %
10 % 16 %
International 5 % 12 %
5 % 12 % 14% 16 %
7 % 10 % Global 8
% 12 % 8 % 12 %
16% 18 % 10 % 11 %
Three Months Ended March 2019 Twelve Months
Ended March 2019 % Change
%
ChangeConstantCurrency*
% ChangeOrganic
(a)
% ChangeConstantCurrency
andOrganic*(a)
% Change
%
ChangeConstantCurrency*
% ChangeOrganic
(a)
% ChangeConstantCurrency
andOrganic*(a)
Channel Revenue Growth
(b)
Wholesale (c) 7 % 11 %
9 % 13 % 17% 18 %
9 % 10 % Direct-to-Consumer
9 % 12 % 7 % 10
% 16% 17 % 12 % 13
% Digital 22 % 26 %
18 % 22 % 34% 35 %
25 % 26 % As of March
2019 (d)
2018
DTC Store Count
(e)
Total 1,407 1,337 *Refer to constant
currency definition on previous pages.
(a) Excludes acquisitions representing the operating results of
Icebreaker® and Altra® for the three and twelve months ended March
2019 and the operating results of Williamson-Dickie for the six
months ended September 2018. The change also excludes divestitures
representing the operating results of Reef® and the Van Moer
business, through the respective dates of sale for the three months
ended December 2018, and for the three and six months ended March
2018. Refer to Non-GAAP financial information on "Reconciliation of
Select Non-GAAP Measures - Three and Twelve Months Ended March
2019" and "Reconciliation of Select Non-GAAP Measures - Three and
Twelve Months Ended March 2018" pages for additional
information.
(b) All percentages exclude the historical results of VF's Jeans
reportable segment, Wrangler® RIGGS brand (included in the Work
reportable segment) and VF Outlet™ business (included in the Other
category presented in the reconciliation of reportable segment
results).
(c) Royalty revenues are included in the wholesale channel for
all periods.
(d) The March 2019 DTC store count includes 34 Icebreaker® and
Altra® stores.
(e) Excludes Wrangler®, Lee® and VF Outlet™ stores.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20190522005260/en/
VF CorporationJoe Alkire,
336-424-7711Vice President, Corporate Development, Investor
Relations and TreasuryorCraig Hodges, 336-424-5636Vice President,
Corporate Affairs
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