VF Corporation (NYSE: VFC) today provided certain preliminary
unaudited selected financial data for full year fiscal 2020 in
conjunction with a debt financing. This release should be read in
conjunction with the financial statements and management’s
discussion and analysis included in the Company’s filings with the
Securities and Exchange Commission (“SEC”), as well as the matters
discussed under "Risk Factors" in the Company's Form 10-K for the
fiscal year ended March 30, 2019 as updated by the Company’s
filings with the SEC.
Full Year Fiscal 2020 Preliminary Unaudited Financial
Data
The following are preliminary estimates for the Company’s fiscal
year ended March 28, 2020:
- Revenue from continuing operations on a reported basis
of approximately $11.3 billion to $11.4 billion, including the
contribution of the Company’s Occupational Workwear business.
- Operating income from continuing operations on a
reported basis of approximately $1.0 billion to $1.1 billion,
including the contribution of the Company’s Occupational Workwear
business. On an adjusted basis, the Company expects operating
income from continuing operations of approximately $1.4 billion to
$1.5 billion, including the Company’s Occupational Workwear
business.
VF intends to proceed with the divestiture of its Occupational
Workwear business as announced on January 21, 2020 and is actively
engaged with prospective buyers. As of March 28, 2020, the Company
expects to have met the accounting criteria for the classification
of discontinued operations for its Occupational Workwear business.
As the Company’s financial closing procedures related to the
discontinued operations presentation for the Occupational Workwear
business are not finalized, these preliminary results include the
contribution of the Company’s Occupational Workwear business. In
conjunction with the release of the Company’s fourth quarter and
full year results in May 2020, VF expects to exclude the operating
results of the Occupational Workwear business from continuing
operations for all periods presented.
The preliminary financial data provided in this release has been
prepared by VF’s management, based upon information available to it
as of the date hereof, and has not been prepared with a view toward
compliance with published guidelines of the SEC for the preparation
or presentation of financial information.
VF has not yet completed its financial and operating closing
procedures as of and for the year ended March 28, 2020, including
but not limited to, the Company’s assessment of its hedged
forecasted transactions and finalization of goodwill and intangible
asset impairment testing. Additionally, the preliminary financial
data above has not been subject to audit, review or other
procedures by the Company’s independent registered public
accounting firm. As a result, actual results may differ materially
from the preliminary results shown above and will not be publicly
available until the Company reports its fourth quarter and full
year fiscal 2020 results in May 2020.
Discontinued Operations - Kontoor Brands Business
On May 22, 2019, VF completed the spin-off of its Jeans
business, which included the Wrangler®, Lee® and Rock &
Republic® brands, as well as the VF Outlet™ business, into an
independent, publicly traded company under the name Kontoor Brands,
Inc. (“Kontoor Brands”). Accordingly, the operating results of the
business have been included in discontinued operations and thus are
excluded from the preliminary financial data above.
Adjusted Amounts - Excluding Transaction and Deal Related
Expenses, Costs Related to Office Relocations and Specified
Strategic Business Decisions, and Noncash Impairment
Charges
The adjusted amounts in this release exclude transaction and
deal related expenses associated with the acquisitions and
integration of the Icebreaker® and Altra® brands. The adjusted
amounts in this release also exclude transaction expenses
associated with the completed spin-off of the Jeans business that
did not meet the criteria for discontinued operations and
transaction expenses related to the strategic review of the
Occupational Workwear business. Total transaction and deal related
expenses were approximately $24 million in fiscal 2020.
The adjusted amounts in this release exclude costs primarily
associated with the previously announced relocation of VF’s global
headquarters and certain brands to Denver, Colorado. The adjusted
amounts in this release also 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 $72 million in fiscal 2020.
The adjusted amounts in this release exclude fourth quarter
estimates of a noncash goodwill impairment charge related to the
Timberland® reporting unit of approximately $320 million and
noncash goodwill and intangible asset impairment charges related to
the Occupational Workwear business of approximately $11 million.
Total estimated impairment charges were approximately $331 million
in fiscal 2020.
Reconciliations of measures calculated in accordance with GAAP
to adjusted amounts are presented below, which identifies and
quantifies all excluded items, and provides management’s view of
why this information is useful to investors.
Non-GAAP Financial Information
The preliminary financial data has been provided on a GAAP
basis, and on an adjusted basis. The adjusted amounts 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 operations and are useful for
period-over-period comparisons of such operations.
Management uses the 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.
In millions
Twelve Months Ended March
2020
Operating Income Range (GAAP)
$ 1,000
-
$ 1,050
Transaction and Deal-Related Costs
24
Relocation and Specified Strategic
Business Decisions
72
Fourth Quarter Impairment Charges
Range
336
-
326
Adjusted Operating Income Range
(Non-GAAP)
$ 1,432
-
$ 1,472
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. 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 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; 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. 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; 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 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 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.
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version on businesswire.com: https://www.businesswire.com/news/home/20200421005496/en/
VF Corporation Contacts: Joe
Alkire Vice President, Corporate Development, Investor Relations
and Treasury (720) 778-4051
Craig Hodges Vice President, Corporate Affairs (720)
778-4116
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