- Revenue from continuing operations increased 104 percent (up
96 percent in constant dollars) to $2.2 billion; excluding
acquisitions, revenue increased 90 percent (up 83 percent in
constant dollars);
- Active segment revenue increased 128 percent (up 120 percent
in constant dollars) including a 110 percent (102 percent in
constant dollars) increase in Vans® brand revenue and a 26
percentage point revenue growth contribution from acquisitions;
Outdoor segment revenue increased 81 percent (up 72 percent in
constant dollars) including a 93 percent (83 percent in constant
dollars) increase in The North Face® brand revenue; Work
segment revenue increased 69 percent (up 66 percent in constant
dollars) including a 61 percent (58 percent in constant dollars)
increase in Dickies® brand revenue;
- International revenue increased 84 percent (up 68 percent in
constant dollars) including a 10 percentage point revenue growth
contribution from acquisitions; Europe revenue increased 126
percent (up 106 percent in constant dollars); Greater China revenue
increased 19 percent (up 9 percent in constant dollars), including
a 23 percent (12 percent in constant dollars) increase in Mainland
China;
- Direct-to-Consumer revenue increased 97 percent (up 90
percent in constant dollars) including a 27 percentage point
revenue growth contribution from acquisitions; Digital revenue
increased 25 percent (up 20 percent in constant dollars) versus the
prior year including a 29 percentage point revenue growth
contribution from acquisitions; excluding acquisitions, Digital
revenue increased 72 percent versus the first quarter of fiscal
2020;
- Gross margin from continuing operations increased 360 basis
points to 56.5 percent; on an adjusted basis, gross margin
increased 260 basis points to 56.7 percent including a 30 basis
point positive impact from acquisitions;
- Operating income from continuing operations on a reported
basis was $203 million; on an adjusted basis, operating income from
continuing operations increased 164 percent (160 percent in
constant dollars) to $148 million including a $32 million
contribution from acquisitions;
- Earnings per share from continuing operations was $0.39;
adjusted earnings per share from continuing operations increased
148 percent (up 144 percent in constant dollars) to $0.27 including
a $0.07 per share contribution from acquisitions;
- Full year fiscal 2022 revenue is now expected to be at least
$12.0 billion, reflecting growth of at least 30 percent, including
an approximate $600 million contribution from the Supreme® brand;
full year fiscal 2022 adjusted earnings per share is now expected
to be at least $3.20, including an approximate $0.25 contribution
from the Supreme® brand.
VF Corporation (NYSE: VFC) today reported financial results for
its first quarter ended July 3, 2021. 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 Transaction and Deal Related Activities and
Costs Related to Specified Strategic Business Decisions.” Unless
otherwise noted, “reported” and “adjusted” amounts are the
same.
"Our teams delivered an outstanding first quarter, powering VF
back to pre-pandemic revenue levels while driving an earnings
recovery ahead of our expectations,” said Steve Rendle, VF's
Chairman, President and CEO. "We continue to see broad-based
momentum across the portfolio, supporting an increase to our fiscal
2022 outlook for each of our largest brands. Though the first
quarter is a relatively small portion of our total year, this
strong start reinforces my confidence in our ability to accelerate
growth through fiscal 2022 and beyond.”
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 June 28, 2021, VF completed the sale of its Occupational
Workwear business. The Occupational Workwear business was 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 included a license
for certain Dickies® occupational workwear products that have
historically been sold through the business-to-business channel.
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, through the
date of sale.
Adjusted Amounts - Excluding Transaction and Deal Related
Activities and Costs Related to Specified Strategic Business
Decisions
The adjusted amounts in this release exclude transaction and
deal related activities associated with the acquisition of the
Supreme® brand. Total transaction and deal related activities
include a decrease in the estimated fair value of the contingent
consideration liability of $73 million and integration costs of
approximately $4 million in the first quarter of fiscal 2022.
The adjusted amounts in this release exclude costs related to
VF's business model transformation, a transformation initiative for
our Asia-Pacific regional operations and certain cost optimization
activities and other charges indirectly related to the divestiture
of the Occupational Workwear business. Total costs were
approximately $14 million in the first quarter of fiscal 2022.
Combined, the above items positively impacted earnings per share
by $0.12 during the first quarter of fiscal 2022. 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
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 and implementing health and safety measures including
social distancing and quarantines.
The majority of VF's supply chain is currently operational.
Suppliers are complying with local public health advisories and
governmental restrictions which has resulted in isolated product
delays. The resurgence of COVID-19 lockdowns in key sourcing
countries has resulted in additional manufacturing capacity
constraints during the first quarter. Additionally, port delays,
equipment availability and other logistics challenges have
contributed to product delays. VF is working with its suppliers to
minimize disruption and is employing expedited freight as needed.
VF's distribution centers are operational in accordance with local
government guidelines while maintaining enhanced health and safety
protocols.
In North America, less than 5 percent of stores were closed at
the beginning of the first quarter. All stores have since reopened
and currently all stores are open.
In the EMEA region, approximately 60 percent of stores were
closed at the beginning of the first quarter. All stores have since
reopened and currently all stores are open.
Nearly all of VF's owned retail stores in the APAC region,
including Mainland China, were open at the beginning of the first
quarter. Additional stores have since re-closed and currently 5% of
stores are closed.
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 2022 Income Statement Review
- Revenue increased 104 percent (up 96 percent in constant
dollars) to $2.2 billion. Excluding the impact of acquisitions,
revenue increased 90 percent (up 83 percent in constant dollars)
driven by VF's largest brands and the EMEA and North American
regions, which experienced a significant negative impact from
COVID-19 in the prior year period.
- Gross margin increased 360 basis points to 56.5 percent,
primarily driven by reduced promotional activity. On an adjusted
basis, gross margin increased 260 basis points, including a 30
basis point positive impact from acquisitions, to 56.7
percent.
- Operating income on a reported basis was $203 million.
On an adjusted basis, operating income increased 164 percent (160
percent in constant dollars) to $148 million, including a $32
million contribution from acquisitions. Operating margin on
a reported basis was 9.2 percent. Adjusted operating margin
increased 2820 basis points, including a 110 basis point positive
impact from acquisitions, to 6.8 percent.
- Earnings per share was $0.39 on a reported basis. On an
adjusted basis, earnings per share increased 148 percent (up 144
percent in constant dollars) to $0.27, including a $0.07
contribution from acquisitions.
Balance Sheet Highlights
Inventories were down 13 percent compared with the same period
last year. During the quarter, VF returned approximately $192
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 2022 Outlook
VF's full year outlook assumes no material deterioration to the
company's current business operations as a result of COVID-19,
governmental actions and regulations. VF's full year fiscal 2022
outlook has been updated and includes the following:
- Revenue is now expected to be at least $12.0 billion,
reflecting growth of at least 30 percent, including an approximate
$600 million contribution from the Supreme® brand. This compares to
the previous expectation of approximately $11.8 billion, reflecting
growth of approximately 28 percent. By segment, revenue for
Outdoor is now expected to increase between 24 percent and
26 percent versus the previous expectation of a 23 to 25 percent
increase; revenue for Active is now expected to increase
between 37 percent and 39 percent versus the previous expectation
of a 34 to 36 percent increase; revenue for Work is now
expected to increase between 16 and 18 percent versus the previous
expectation of a 10 to 12 percent increase.
- International revenue is expected to increase between 25
percent and 27 percent. By geographic region, in the EMEA region,
revenue is expected to increase between 29 percent and 31 percent.
In the Asia Pacific region, revenue is expected to increase between
18 percent and 20 percent. And, in the Americas (non-U.S.) region,
revenue is expected to increase between 28 percent and 30
percent.
- Direct-to-consumer revenue is now expected to increase
between 39 percent and 41 percent versus the previous expectation
of 38 percent and 40 percent, including Digital revenue
growth of between 29 percent and 31 percent.
- Adjusted gross margin is expected to exceed 56.0
percent, which represents an estimated increase of more than 270
basis points.
- Adjusted operating margin is now expected to increase
more than 500 basis points to more than 13.0 percent, versus the
previous expectation of approximately 12.8 percent.
- Adjusted earnings per share is expected to be at least
$3.20, including an approximate $0.25 contribution from the
Supreme® brand. This compares to the previous expectation of
approximately $3.05.
- Adjusted cash flow from operations is expected to exceed
$1.0 billion.
- Other full year assumptions include an effective tax
rate of approximately 15 percent and capital
expenditures of approximately $350 million.
Dividend Declared
VF’s Board of Directors declared a quarterly dividend of $0.49
per share, payable on September 20, 2021, to shareholders of record
on September 10, 2021. 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 2022 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 2022 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 and
other direct-to-consumer business risks; manufacturing and product
innovation; increasing pressure on margins; VF’s ability to
implement its business strategy; VF’s ability to grow its
international, direct-to-consumer and digital businesses; VF's
ability to transform its model to be more consumer-minded,
retail-centric and hyper-digital; retail industry changes and
challenges; VF's ability to create and maintain an agile and
efficient operating model and organizational structure; 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 business, consumer and employee
data and comply with privacy and security regulations; foreign
currency fluctuations; stability of VF’s and VF's vendors'
manufacturing facilities and VF's ability to establish and maintain
effective supply chain capabilities; 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 recruit, develop or retain qualified
employees; 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 acquisitions and
dispositions and integrate acquisitions, including the recently
acquired Supreme® brand; business resiliency in response to natural
or man-made economic, political or environmental disruptions;
changes in tax laws and liabilities; legal, regulatory, political
and economic risks and changes to laws and regulations; 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
2021
2020
Net revenues
$
2,194,557
$
1,076,293
Costs and operating expenses
Cost of goods sold
955,551
506,951
Selling, general and administrative
expenses
1,036,122
816,151
Total costs and operating expenses
1,991,673
1,323,102
Operating income (loss)
202,884
(246,809
)
Interest, net
(32,775
)
(27,949
)
Other income (expense), net
9,041
(38,187
)
Income (loss) from continuing
operations before income taxes
179,150
(312,945
)
Income tax expense (benefit)
25,178
(35,203
)
Income (loss) from continuing
operations
153,972
(277,742
)
Income (loss) from discontinued
operations, net of tax
170,273
(7,871
)
Net income (loss)
$
324,245
$
(285,613
)
Earnings (loss) per common share -
basic (a)
Continuing operations
$
0.39
$
(0.71
)
Discontinued operations
0.44
(0.02
)
Total earnings (loss) per common share
- basic
$
0.83
$
(0.73
)
Earnings (loss) per common share -
diluted (a)
Continuing operations
$
0.39
$
(0.71
)
Discontinued operations
0.43
(0.02
)
Total earnings (loss) per common share
- diluted
$
0.82
$
(0.73
)
Weighted average shares
outstanding
Basic
391,351
388,695
Diluted
394,128
390,791
Cash dividends per common share
$
0.49
$
0.48
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 2021 and June 2020 relate to the
13-week fiscal period ended July 3, 2021 and the 13-week fiscal
period ended June 27, 2020, respectively, and references to March
2021 relate to the balance sheet as of April 3, 2021.
(a) Amounts have been calculated using
unrounded numbers.
VF CORPORATION
Condensed Consolidated Balance
Sheets
(Unaudited)
(In thousands)
June
March
June
2021
2021
2020
ASSETS
Current assets
Cash and equivalents
$
1,274,926
$
815,750
$
2,145,111
Accounts receivable, net
1,138,811
1,298,020
934,984
Inventories
1,216,818
1,061,839
1,402,858
Short-term investments
598,806
598,806
700,000
Other current assets
334,777
423,877
513,049
Current assets of discontinued
operations
—
587,578
565,135
Total current assets
4,564,138
4,785,870
6,261,137
Property, plant and equipment,
net
1,016,465
975,876
957,309
Goodwill and intangible assets,
net
5,455,210
5,454,972
3,018,370
Operating lease right-of-use
assets
1,426,706
1,474,434
1,354,308
Other assets
1,087,832
1,062,877
887,921
Total assets
$
13,550,351
$
13,754,029
$
12,479,045
LIABILITIES AND STOCKHOLDERS'
EQUITY
Current liabilities
Short-term borrowings
$
8,091
$
11,061
$
19,256
Current portion of long-term debt
1,001,030
1,023
1,025
Accounts payable
534,803
463,208
348,932
Accrued liabilities
1,527,522
1,609,928
1,254,967
Current liabilities of discontinued
operations
—
125,257
91,283
Total current liabilities
3,071,446
2,210,477
1,715,463
Long-term debt
4,726,234
5,709,149
5,609,792
Operating lease liabilities
1,192,792
1,236,461
1,104,500
Other liabilities
1,285,849
1,541,778
1,136,692
Total liabilities
10,276,321
10,697,865
9,566,447
Stockholders' equity
3,274,030
3,056,164
2,912,598
Total liabilities and stockholders'
equity
$
13,550,351
$
13,754,029
$
12,479,045
VF CORPORATION
Condensed Consolidated
Statements of Cash Flows
(Unaudited)
(In thousands)
Three Months Ended
June
2021
2020
Operating activities
Net income (loss)
$
324,245
$
(285,613
)
Income (loss) from discontinued
operations, net of tax
170,273
(7,871
)
Income (loss) from continuing operations,
net of tax
153,972
(277,742
)
Depreciation and amortization
68,050
63,026
Reduction in the carrying amount of
right-of-use assets
104,930
101,772
Other adjustments
(252,034
)
102,490
Cash provided (used) by operating
activities - continuing operations
74,918
(10,454
)
Cash provided by operating activities -
discontinued operations
6,090
7,266
Cash provided (used) by operating
activities
81,008
(3,188
)
Investing activities
Proceeds from sale of businesses, net of
cash sold
616,529
—
Purchases of short-term investments
—
(700,000
)
Capital expenditures
(93,218
)
(69,191
)
Software purchases
(21,006
)
(13,477
)
Other, net
7,048
(573
)
Cash provided (used) by investing
activities - continuing operations
509,353
(783,241
)
Cash used by investing activities -
discontinued operations
(525
)
(1,914
)
Cash provided (used) by investing
activities
508,828
(785,155
)
Financing activities
Net increase (decrease) from short-term
borrowings and long-term debt
(3,226
)
1,765,041
Cash dividends paid
(192,131
)
(186,746
)
Proceeds from issuance of Common Stock,
net of (payments) for tax withholdings
20,910
(15,634
)
Cash provided (used) by financing
activities
(174,447
)
1,562,661
Effect of foreign currency rate changes
on cash, cash equivalents and restricted cash
10,003
4,126
Net change in cash, cash equivalents
and restricted cash
425,392
778,444
Cash, cash equivalents and restricted
cash – beginning of year
851,205
1,411,322
Cash, cash equivalents and restricted
cash – end of period
$
1,276,597
$
2,189,766
VF CORPORATION
Supplemental Financial
Information
Reportable Segment
Information
(Unaudited)
(In thousands)
Three Months Ended
June
% Change
% Change
Constant
Currency (a)
% Change
Organic (b)
% Change Constant Currency and
Organic (a) (b)
2021
2020
Segment revenues
Outdoor
$
617,754
$
341,228
81
%
72
%
81
%
72
%
Active
1,302,068
571,316
128
%
120
%
102
%
94
%
Work
274,735
162,430
69
%
66
%
69
%
66
%
Other (c)
—
1,319
*
*
*
*
Total segment revenues
$
2,194,557
$
1,076,293
104
%
96
%
90
%
83
%
Segment profit (loss)
Outdoor
$
(71,747
)
$
(160,711
)
Active
270,862
7,136
Work
41,004
(11,401
)
Other (c)
(282
)
(2,361
)
Total segment profit (loss)
239,837
(167,337
)
Corporate and other expenses
(27,912
)
(117,659
)
Interest, net
(32,775
)
(27,949
)
Income (loss) from continuing
operations before income taxes
$
179,150
$
(312,945
)
(a) Refer to constant currency definition
on the following pages.
(b) Excludes acquisition representing the
operating results of Supreme for the three months ended June 2021.
Refer to Non-GAAP financial information on "Reconciliation of
Select GAAP Measures to Non-GAAP Measures - Three Months Ended June
2021" 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
2021
As Reported
Adjust for Foreign
under GAAP
Currency Exchange
Constant Currency
Segment revenues
Outdoor
$
617,754
$
(30,213
)
$
587,541
Active
1,302,068
(47,816
)
1,254,252
Work
274,735
(4,993
)
269,742
Total segment revenues
$
2,194,557
$
(83,022
)
$
2,111,535
Segment profit (loss)
Outdoor
$
(71,747
)
$
1,225
$
(70,522
)
Active
270,862
(10,839
)
260,023
Work
41,004
(812
)
40,192
Other
(282
)
(28
)
(310
)
Total segment profit
239,837
(10,454
)
229,383
Corporate and other expenses
(27,912
)
728
(27,184
)
Interest, net
(32,775
)
—
(32,775
)
Income from continuing operations
before income taxes
$
179,150
$
(9,726
)
$
169,424
Diluted earnings per share
growth
155
%
(3
)%
152
%
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
2021
(Unaudited)
(In thousands, except per
share amounts)
Three Months Ended June 2021
As Reported
under GAAP
Transaction and Deal Related
Activities (a)
Specified Strategic Business
Decisions (b)
Adjusted
Contribution from Acquisition
(c)
Adjusted Organic
Revenues
$
2,194,557
$
—
$
—
$
2,194,557
$
(145,731
)
$
2,048,826
Gross profit
1,239,006
—
6,201
1,245,207
(88,809
)
1,156,398
Percent
56.5
%
56.7
%
56.4
%
Operating income
202,884
(68,596
)
14,124
148,412
(31,689
)
116,723
Percent
9.2
%
6.8
%
5.7
%
Diluted earnings per share from
continuing operations (d)
0.39
(0.15
)
0.03
0.27
(0.07
)
0.20
(a) Transaction and deal related
activities include activities associated with the acquisition of
Supreme Holdings, Inc. ("Supreme") for the three months ended June
2021. Transaction and deal related activities include a decrease in
the estimated fair value of the contingent consideration liability
of $73.0 million and integration costs of $4.4 million for the
three months ended June 2021. The transaction and deal related
activities resulted in a net tax expense of $9.5 million in the
three months ended June 2021, primarily related to the impact of
the decrease in the estimated fair value of the contingent
consideration liability on the interim tax rate calculation.
(b) Specified strategic business decisions
for the three months ended June 2021 include costs related to VF's
business model transformation of $1.5 million in the three months
ended June 2021, related primarily to restructuring and other
costs. Specified strategic business decisions also include costs
related to a transformation initiative for our Asia-Pacific
regional operations of $8.5 million in the three months ended June
2021. Specified strategic business decisions also include cost
optimization activities and other charges indirectly related to the
divestiture of the Occupational Workwear business, which totaled
$4.1 million during the three months ended June 2021. The specified
strategic business decisions resulted in a net tax benefit of $2.2
million in the three months ended June 2021.
(c) The contribution from acquisition
represents the operating results of Supreme for the three months
ended June 2021. The results exclude transaction and deal related
activities.
(d) Amounts shown in the table have been
calculated using unrounded numbers. The diluted earnings per share
impacts were calculated using 394,128,000 weighted average common
shares for the three months ended June 2021.
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 activities and activity
related to specified strategic business decisions, and on an
adjusted organic basis, which excludes the operating results of
Supreme (for the three months ended June 2021). Contribution from
acquisition also excludes transaction and deal related activities.
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 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
Top 4 Brand Revenue
Information
(Unaudited)
Three Months Ended June
2021
Top 4 Brand Revenue Growth
Americas
EMEA
APAC
Global
Vans®
% change
146
%
148
%
29
%
110
%
% change constant currency*
144
%
125
%
19
%
102
%
The North Face®
% change
81
%
168
%
31
%
93
%
% change constant currency*
80
%
142
%
22
%
83
%
Timberland®
% change
111
%
74
%
(18
)%
70
%
% change constant currency*
108
%
58
%
(22
)%
63
%
Dickies®
% change
84
%
10
%
7
%
61
%
% change constant currency*
83
%
(1
)%
0
%
58
%
*Refer to constant currency definition on
previous pages.
VF CORPORATION
Supplemental Financial
Information
Geographic and Channel Revenue
Information
(Unaudited)
Three Months Ended June
2021
% Change
% Change Constant
Currency*
% Change Organic (a)
% Change Constant Currency and
Organic*(a)
Geographic
Revenue Growth
U.S.
125
%
125
%
107
%
107
%
EMEA
126
%
106
%
117
%
97
%
APAC
32
%
24
%
20
%
11
%
Greater China
19
%
9
%
19
%
9
%
Americas (non-U.S.)
175
%
146
%
175
%
146
%
International
84
%
68
%
74
%
58
%
Global
104
%
96
%
90
%
83
%
Three Months Ended June
2021
% Change
% Change Constant
Currency*
% Change Organic (a)
% Change Constant Currency and
Organic*(a)
Channel Revenue
Growth
Wholesale (b)
111
%
102
%
111
%
102
%
Direct-to-consumer
97
%
90
%
70
%
64
%
Digital
25
%
20
%
(4
)%
(9
)%
As of June
2021
2020
DTC Store
Count
Total
1,364
1,376
*Refer to constant currency definition on
previous pages.
(a) Excludes acquisition representing the
operating results of Supreme for the three months ended June 2021.
Refer to Non-GAAP financial information on "Reconciliation of
Select GAAP Measures to Non-GAAP Measures - Three Months Ended June
2021" 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/20210730005056/en/
VF Corporation John Kelley,
720-778-4053 Senior Director, Corporate Development and Investor
Relations or Craig Hodges, 720-778-4116 Vice President, Corporate
Affairs
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