VF Corporation (NYSE: VFC) today announced financial results for
its first quarter (Q1'FY23) ended July 2, 2022.
Q1'FY23 Financial Highlights
- Revenue $2.3 billion, up 3% (up 7% in constant dollars) with
big four brands up 2% (up 6% in constant dollars) and the balance
of the portfolio up 9% (up 16% in constant dollars)
- The North Face® revenue $0.5 billion, up 31% (up 37% in
constant dollars)
- Vans® revenue $0.9 billion, down 7% (down 4% in constant
dollars)
- Gross margin 53.9%, down 260 basis points; Adjusted gross
margin 54.1%, down 260 basis points
- Operating margin 2.8%, down 640 basis points; Adjusted
operating margin 3.4%, down 340 basis points
- Earnings (loss) per share (EPS) $(0.14), down 137%; Adjusted
EPS $0.09, down 68%
- Return of $194 million to shareholders through cash
dividends
FY23 Financial Outlook
- VF is maintaining its currency adjusted FY23 outlook while
revising its earnings outlook on a reported dollar basis to reflect
ongoing negative impacts from foreign currency fluctuations; we now
expect adjusted EPS of $3.05 to $3.15, implying 4% to 7% growth
versus the prior year on a constant dollar basis
- Total VF revenue up at least 7% in constant dollars, unchanged
from the previous outlook
- Adjusted gross margin up slightly versus previous outlook of up
approximately 50 basis points
- Adjusted operating margin approximately 13.2% versus previous
outlook of approximately 13.6%
- Adjusted cash flow from operations approximately $1.2 billion;
Capital expenditures approximately $250 million, both unchanged
versus previous outlook
- Excludes the impact of a payment VF anticipates making in FY23
of approximately $857 million plus additional accrued interest
relating to an assessment from the Internal Revenue Service (IRS)
for the dispute regarding the timing of income inclusion associated
with VF's acquisition of Timberland in 2011, as previously
disclosed
- VF's FY23 outlook assumes the following:
- No additional significant COVID-19 related lockdowns in any key
commercial or production regions
- No significant worsening in global inflation rates and consumer
sentiment
Steve Rendle, Chairman, President and CEO of VF said:
“We delivered solid top-line results in Q1, ahead of our initial
expectations, led by strong consumer engagement with our outdoor,
streetwear and active brands amidst a softer consumer environment
and inflationary pressures. Importantly, we are maintaining our
operating outlook for FY23, a testament to the resiliency of our
purpose-built family of brands.
I remain impressed by our teams, whose passion, perseverance and
execution continue to drive our success.
While uncertainty persists across geographies and marketplaces
from ongoing macro-economic headwinds, we are focused on the things
that we can control and will continue our strategic investments to
ensure long-term, sustainable and profitable growth.”
Summary Revenue
Information
(Unaudited)
Three Months Ended
June
(Dollars in millions)
2022
2021
% Change
% Change (constant currency)
Brand:
Vans®
$
946.8
$
1,019.9
(7
)%
(4
)%
The North Face®
481.1
366.2
31
%
37
%
Timberland®
269.5
249.4
8
%
14
%
Dickies®
170.4
199.3
(15
)%
(13
)%
Other Brands
393.9
359.8
9
%
16
%
VF Revenue
$
2,261.6
$
2,194.6
3
%
7
%
Region:
Americas
$
1,385.1
$
1,301.9
6
%
7
%
EMEA
594.6
540.0
10
%
24
%
APAC
281.9
352.7
(20
)%
(15
)%
VF Revenue
$
2,261.6
$
2,194.6
3
%
7
%
International
$
992.0
$
998.0
(1
)%
9
%
Channel:
DTC
$
999.1
$
1,073.7
(7
)%
(3
)%
Wholesale (a)
1,262.5
1,120.9
13
%
18
%
VF Revenue
$
2,261.6
$
2,194.6
3
%
7
%
All references to the three months ended
June 2022 relate to the 13-week fiscal period ended July 2, 2022
and all references to the three months ended June 2021 relate to
the 13-week fiscal period ended July 3, 2021.
Note: Amounts may not sum due to
rounding
(a) Royalty revenues are included in the
wholesale channel for all periods.
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 below “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 below “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 below “Adjusted Amounts - Excluding Transaction
and Deal Related Activities, Costs Related to Specified Strategic
Business Decisions and Pension Settlement Charge.” Unless otherwise
noted, “reported” and “adjusted” amounts are the same.
First Quarter Fiscal 2023 Income Statement Review
- Revenue increased 3% (up 7% in constant dollars) to $2.3
billion driven by increases in the EMEA and Americas regions
partially offset by a decline in the APAC region primarily due to
COVID lockdowns in China.
- Gross margin decreased 260 basis points to 53.9%,
primarily driven by mix and higher freight costs partially offset
by price increases. On an adjusted basis, gross margin decreased
260 basis points to 54.1%.
- Operating income on a reported basis was $63.4 million.
On an adjusted basis, operating income decreased 48% (down 40% in
constant dollars) to $77.5 million. Operating margin on a
reported basis was 2.8%. Adjusted operating margin decreased 340
basis points to 3.4%.
- Earnings (loss) per share was $(0.14) on a reported
basis. On an adjusted basis, earnings per share decreased 68% (down
59% in constant dollars) to $0.09.
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. Raw
material suppliers in China are currently operational, though the
8-week lockdown in China during VF's first quarter has resulted in
logistics challenges which are contributing to ongoing product
delays. Suppliers are complying with local public health advisories
and governmental restrictions. Most final product manufacturing and
assembly suppliers are largely back to normal operating levels. VF
is working with its suppliers to minimize disruption and is
employing expedited freight strategically as needed. VF's
distribution centers are operational in accordance with local
government guidelines while maintaining enhanced health and safety
protocols.
In North America, no stores were closed during the first
quarter. Currently, all stores are open.
In the EMEA region, no stores were closed during the first
quarter due to COVID-19. Currently, all stores are open.
In the APAC region, including Mainland China, 12% of stores
(including partners) were closed at the beginning of the first
quarter with a peak of 23% of stores closed and an average of 14%
of stores closed throughout the quarter. No stores were closed at
the end of the first quarter and all stores are currently open.
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.
Balance Sheet Highlights
Inventories were up 92% compared with the same period last year,
driven by an increase of in-transit inventory of approximately $550
million as VF modified terms with the majority of its suppliers to
take ownership of inventory near point of shipment rather than
destination. Accounts payable also increased 91%, which was largely
driven by the increase of in-transit inventory. VF returned
approximately $194 million of cash to shareholders through
dividends during the quarter.
Dividend Declared
VF’s Board of Directors declared a quarterly dividend of $0.50
per share, payable on September 20, 2022, to shareholders of record
on September 12, 2022. Subject to approval by its Board of
Directors, VF intends to continue to pay its regularly scheduled
cash dividend.
Webcast Information
VF will host its first quarter fiscal 2023 conference call
beginning at 4:30 p.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 2023 results will be
available at ir.vfc.com today before the conference call 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.
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 were
historically sold through the business-to-business channel.
Accordingly, the company has reported 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, Costs Related to Specified Strategic Business Decisions
and Pension Settlement Charge
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 integration costs of approximately $0.3 million in the
first quarter of fiscal 2023.
The adjusted amounts in this release exclude costs related to
VF's business model transformation and a transformation initiative
for our Asia-Pacific regional operations. Total costs were
approximately $14 million in the first quarter of fiscal 2023.
The adjusted amounts in this release exclude a noncash pension
settlement charge. The pension settlement charge resulted from the
purchase of a group annuity contract, which was an action taken to
streamline administration, manage financial risk associated with
pension plans, and to transfer a portion of the liability
associated with VF's U.S. pension plan to an insurance company.
Total expense was approximately $92 million in the first quarter of
fiscal 2023.
Combined, the above items negatively impacted earnings per share
by $0.23 during the first quarter of fiscal 2023. 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. The company also
provides guidance on a non-GAAP basis as we cannot predict certain
elements which are included in reported GAAP results, including the
impact of foreign currency and other strategic initiatives.
Additionally, the impact of the anticipated payment of taxes and
interest related to the dispute with the IRS regarding the
Timberland acquisition in 2011 has been excluded from fiscal 2023
adjusted cash flow from operations.
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; changes in global economic conditions and the
financial strength of VF’s customers, including as a result of
current inflationary pressures; 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; third-party 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 or information 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 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; business resiliency in
response to natural or man-made economic, political or
environmental disruptions; changes in tax laws and additional tax
liabilities, including for the timing of income inclusion
associated with our acquisition of the Timberland® brand in 2011;
legal, regulatory, political, economic, and geopolitical risks,
including those related to the current conflict in Ukraine; 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 environmental,
social and governance issues; and tax risks associated with the
spin-off of our Jeanswear business completed in 2019. 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
2022
2021
Net revenues
$
2,261,595
$
2,194,557
Costs and operating expenses
Cost of goods sold
1,042,982
955,551
Selling, general and administrative
expenses
1,155,251
1,036,122
Total costs and operating expenses
2,198,233
1,991,673
Operating income
63,362
202,884
Interest, net
(31,262
)
(32,775
)
Other income (expense), net
(94,714
)
9,041
Income (loss) from continuing
operations before income taxes
(62,614
)
179,150
Income tax expense (benefit)
(6,654
)
25,178
Income (loss) from continuing
operations
(55,960
)
153,972
Income from discontinued operations,
net of tax
—
170,273
Net income (loss)
$
(55,960
)
$
324,245
Earnings (loss) per common share -
basic (a)
Continuing operations
$
(0.14
)
$
0.39
Discontinued operations
—
0.44
Total earnings (loss) per common share
- basic
$
(0.14
)
$
0.83
Earnings (loss) per common share -
diluted (a)
Continuing operations
$
(0.14
)
$
0.39
Discontinued operations
—
0.43
Total earnings (loss) per common share
- diluted
$
(0.14
)
$
0.82
Weighted average shares
outstanding
Basic
387,563
391,351
Diluted
388,396
394,128
Cash dividends per common share
$
0.50
$
0.49
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 the periods ended June 2022 and June 2021 relate to
the 13-week fiscal period ended July 2, 2022 and the 13-week fiscal
period ended July 3, 2021, respectively. References to March 2022
relate to information as of April 2, 2022.
(a) Amounts have been calculated using
unrounded numbers.
VF CORPORATION
Condensed Consolidated Balance
Sheets
(Unaudited)
(In thousands)
June
March
June
2022
2022
2021
ASSETS
Current assets
Cash and equivalents
$
528,029
$
1,275,943
$
1,274,926
Accounts receivable, net
1,249,713
1,467,842
1,138,811
Inventories
2,341,395
1,418,673
1,216,818
Short-term investments
—
—
598,806
Other current assets
492,569
425,622
334,777
Total current assets
4,611,706
4,588,080
4,564,138
Property, plant and equipment,
net
1,007,853
1,041,777
1,016,465
Goodwill and intangible assets,
net
5,343,684
5,394,158
5,455,210
Operating lease right-of-use
assets
1,227,462
1,247,056
1,426,706
Other assets
1,021,048
1,071,137
1,087,832
Total assets
$
13,211,753
$
13,342,208
$
13,550,351
LIABILITIES AND STOCKHOLDERS'
EQUITY
Current liabilities
Short-term borrowings
$
827,380
$
335,462
$
8,091
Current portion of long-term debt
1,058
501,051
1,001,030
Accounts payable
1,022,755
562,992
534,803
Accrued liabilities
1,612,804
1,915,892
1,527,522
Total current liabilities
3,463,997
3,315,397
3,071,446
Long-term debt
4,468,399
4,584,261
4,726,234
Operating lease liabilities
1,006,274
1,023,759
1,192,792
Other liabilities
920,590
888,436
1,285,849
Total liabilities
9,859,260
9,811,853
10,276,321
Stockholders' equity
3,352,493
3,530,355
3,274,030
Total liabilities and stockholders'
equity
$
13,211,753
$
13,342,208
$
13,550,351
VF CORPORATION
Condensed Consolidated
Statements of Cash Flows
(Unaudited)
(In thousands)
Three Months Ended
June
2022
2021
Operating activities
Net income (loss)
$
(55,960
)
$
324,245
Income from discontinued operations, net
of tax
—
170,273
Income (loss) from continuing operations,
net of tax
(55,960
)
153,972
Depreciation and amortization
66,754
68,050
Reduction in the carrying amount of
right-of-use assets
93,337
104,930
Other adjustments
(462,451
)
(252,034
)
Cash provided (used) by operating
activities - continuing operations
(358,320
)
74,918
Cash provided by operating activities -
discontinued operations
—
6,090
Cash provided (used) by operating
activities
(358,320
)
81,008
Investing activities
Proceeds from sale of businesses, net of
cash sold
—
616,529
Capital expenditures
(52,657
)
(93,218
)
Software purchases
(26,907
)
(21,006
)
Other, net
10,045
7,048
Cash provided (used) by investing
activities - continuing operations
(69,519
)
509,353
Cash used by investing activities -
discontinued operations
—
(525
)
Cash provided (used) by investing
activities
(69,519
)
508,828
Financing activities
Contingent consideration payment
(56,976
)
—
Net decrease from short-term borrowings
and long-term debt
(8,344
)
(3,226
)
Cash dividends paid
(194,135
)
(192,131
)
Proceeds from issuance of Common Stock,
net of (payments) for tax withholdings
(1,766
)
20,910
Cash used by financing activities
(261,221
)
(174,447
)
Effect of foreign currency rate changes
on cash, cash equivalents and restricted cash
(58,988
)
10,003
Net change in cash, cash equivalents
and restricted cash
(748,048
)
425,392
Cash, cash equivalents and restricted
cash – beginning of year
1,277,082
851,205
Cash, cash equivalents and restricted
cash – end of period
$
529,034
$
1,276,597
VF CORPORATION
Supplemental Financial
Information
Reportable Segment
Information
(Unaudited)
(In thousands)
Three Months Ended
June
% Change
% Change Constant Currency
(a)
2022
2021
Segment revenues
Outdoor
$
768,624
$
617,754
24
%
31
%
Active
1,253,945
1,302,068
(4
)%
0
%
Work
238,878
274,735
(13
)%
(11
)%
Other (b)
148
—
*
*
Total segment revenues
$
2,261,595
$
2,194,557
3
%
7
%
Segment profit (loss)
Outdoor
$
(46,851
)
$
(71,747
)
Active
214,031
270,862
Work
35,002
41,004
Other (b)
(225
)
(282
)
Total segment profit
201,957
239,837
Corporate and other expenses
(233,309
)
(27,912
)
Interest, net
(31,262
)
(32,775
)
Income (loss) from continuing
operations before income taxes
$
(62,614
)
$
179,150
(a) Refer to constant currency definition
on the following pages.
(b) 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 and sourcing activities related to transition
services.
* Calculation not meaningful
VF CORPORATION
Supplemental Financial
Information
Reportable Segment Information
– Constant Currency Basis
(Unaudited)
(In thousands)
Three Months Ended June
2022
As Reported
Adjust for Foreign
under GAAP
Currency Exchange
Constant Currency
Segment revenues
Outdoor
$
768,624
$
39,209
$
807,833
Active
1,253,945
52,074
1,306,019
Work
238,878
4,484
243,362
Other
148
—
148
Total segment revenues
$
2,261,595
$
95,767
$
2,357,362
Segment profit (loss)
Outdoor
$
(46,851
)
$
(116
)
$
(46,967
)
Active
214,031
12,042
226,073
Work
35,002
549
35,551
Other
(225
)
(10
)
(235
)
Total segment profit
201,957
12,465
214,422
Corporate and other expenses
(233,309
)
(892
)
(234,201
)
Interest, net
(31,262
)
—
(31,262
)
Income (loss) from continuing
operations before income taxes
$
(62,614
)
$
11,573
$
(51,041
)
Diluted earnings per share
growth
(137
)%
7
%
(130
)%
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
2022
(Unaudited)
(In thousands, except per
share amounts)
Three Months Ended June 2022
As Reported
under GAAP
Transaction and Deal Related
Activities (a)
Specified Strategic Business
Decisions (b)
Pension Settlement Charge
(c)
Adjusted
Revenues
$
2,261,595
$
—
$
—
$
—
$
2,261,595
Gross profit
1,218,613
—
5,081
—
1,223,694
Percent
53.9
%
54.1
%
Operating income
63,362
331
13,778
—
77,471
Percent
2.8
%
3.4
%
Diluted earnings (loss) per share from
continuing operations (d)
(0.14
)
—
0.03
0.20
0.09
(a) Transaction and deal related
activities include activities associated with the acquisition of
Supreme Holdings, Inc. ("Supreme") for the three months ended June
2022. Transaction and deal related activities include integration
costs of $0.3 million for the three months ended June 2022. The
transaction and deal related activities resulted in a net tax
benefit of $0.1 million in the three months ended June 2022.
(b) Specified strategic business decisions
for the three months ended June 2022 include costs related to VF's
business model transformation of $6.0 million in the three months
ended June 2022, 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 $7.8 million in the three months ended June
2022. The specified strategic business decisions resulted in a net
tax benefit of $2.2 million in the three months ended June
2022.
(c) A pension settlement charge of $91.8
million was recorded in the 'Other income (expense), net' line item
in the three months ended June 2022. The pension settlement charge
resulted from the purchase of a group annuity contract, which was
an action taken to streamline administration, manage financial risk
associated with pension plans, and to transfer a portion of the
liability associated with VF's U.S. pension plan to an insurance
company. The pension settlement charge resulted in a net tax
benefit of $13.8 million in the three months ended June 2022,
related to the impact of the settlement charge on the interim tax
rate calculation.
(d) Amounts shown in the table have been
calculated using unrounded numbers. The diluted earnings per share
impacts were calculated using 388,396,000 weighted average common
shares for the three months ended June 2022.
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 activities, activity related to
specified strategic business decisions and a pension settlement
charge. The adjusted presentation provides non-GAAP measures.
Management believes these measures provide investors with useful
supplemental information regarding VF's underlying business trends
and the performance of VF's ongoing operations and are useful for
period-over-period comparisons of such operations.
Management uses the above financial measures internally in its
budgeting and review process and, in some cases, as a factor in
determining compensation. While management believes that these
non-GAAP financial measures are useful in evaluating the business,
this information should be considered as supplemental in nature and
should be viewed in addition to, and not in lieu of or superior to,
VF's operating performance measures calculated in accordance with
GAAP. In addition, these non-GAAP financial measures may not be the
same as similarly titled measures presented by other companies.
VF CORPORATION
Supplemental Financial
Information
Reconciliation of Select GAAP
Measures to Non-GAAP Measures - Three Months Ended June
2021
(Unaudited)
(In thousands, except per
share amounts)
Three Months Ended June 2021
As Reported
under GAAP
Transaction and Deal Related
Costs (a)
Specified Strategic Business
Decisions (b)
Adjusted
Revenues
$
2,194,557
$
—
$
—
$
2,194,557
Gross profit
1,239,006
—
6,201
1,245,207
Percent
56.5
%
56.7
%
Operating income
202,884
(68,596
)
14,124
148,412
Percent
9.2
%
6.8
%
Diluted earnings per share from
continuing operations (c)
0.39
(0.15
)
0.03
0.27
(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) 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 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
2022
Top 4 Brand Revenue Growth
Americas
EMEA
APAC
Global
Vans®
% change
3%
(9)%
(38)%
(7)%
% change constant currency*
3%
2%
(35)%
(4)%
The North Face®
% change
39%
28%
13%
31%
% change constant currency*
39%
43%
16%
37%
Timberland®
% change
(4)%
27%
23%
8%
% change constant currency*
(4)%
43%
30%
14%
Dickies®
% change
(17)%
15%
(12)%
(15)%
% change constant currency*
(17)%
30%
(6)%
(13)%
*Refer to constant currency definition on
previous pages.
VF CORPORATION
Supplemental Financial
Information
Geographic and Channel Revenue
Information
(Unaudited)
Three Months Ended June
2022
% Change
% Change Constant
Currency*
Geographic
Revenue Growth
Americas
6%
7%
EMEA
10%
24%
APAC
(20)%
(15)%
Greater China
(33)%
(30)%
International
(1)%
9%
Global
3%
7%
Three Months Ended June
2022
% Change
% Change Constant
Currency*
Channel Revenue
Growth
Wholesale (a)
13%
18%
Direct-to-consumer
(7)%
(3)%
Digital
(18)%
(14)%
As of June
2022
2021
DTC Store
Count
Total
1,297
1,364
*Refer to constant currency definition on
previous pages.
(a) Royalty revenues are included in the
wholesale channel for all periods.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220728005202/en/
Investor Contact: Allegra
Perry ir@vfc.com
Media Contact: Colin Wheeler
corporate_communications@vfc.com
VF (NYSE:VFC)
Historical Stock Chart
From Feb 2024 to Mar 2024
VF (NYSE:VFC)
Historical Stock Chart
From Mar 2023 to Mar 2024