- VF introduces the fiscal year 2027 (FY27) long-term strategic
growth plan, which outlines the Company’s plan to drive value for
shareholders
- FY27 financial targets include:
- Revenue five-year compounded annual growth rate (CAGR) up mid-
to high single digit % (in constant dollars).
- Operating margin of approximately 15% by FY27, reflecting both
gross margin expansion and SG&A leverage.
- Earnings per share (EPS) to grow at a five-year CAGR of high
single to low double-digit %.
- Cash available to return to shareholders through dividends and
share repurchases of approximately $7 billion (cumulative between
fiscal year 2023 (FY23) and FY27) with Organic Total Shareholder
Return (TSR) between a low double-digit % and low teens %
CAGR.
- FY23 outlook revised; revenue expected to be up about 5% to 6%
and adjusted EPS expected to be in the range of $2.60 to
$2.70.
VF Corporation (NYSE: VFC), a leading portfolio of
active-lifestyle brands including Vans®, The North Face®,
Timberland® and Dickies®, today is hosting its 2022 Investor Day in
Denver, Colorado. In connection with the event, the company is
introducing a FY27 long-term strategic growth plan and financial
targets.
“Our new five-year growth plan demonstrates how we will leverage
VF’s proven strengths and distinct model to deliver superior
returns to shareholders over the long term,” said VF Chairman,
President and CEO, Steve Rendle. “The global economic environment
has dramatically changed since we held our last Investor Day in
late 2019. Despite significant disruptions during the past three
years, VF has successfully navigated the challenges to become a
more agile and focused enterprise that is advancing a clear vision
to be the world’s most dynamic portfolio of iconic, deeply loved,
active-lifestyle brands.”
“While economic uncertainties persist, we are actively
addressing challenges within our business, and we remain confident
in our ability to generate consistent, sustainable growth across
our brand portfolio over the long term. We will continue to deepen
our engagement with consumers, expand into new categories and
markets, leverage our powerful business platforms, and lean on the
seasoned leaders and talented teams who are driving our strategies.
VF and our brands remain well-positioned to continue our journey of
broad-based growth and success.”
Long-Term Strategic Growth Plan
At the event, members of VF’s executive leadership team will
present a detailed overview of the Company’s strategies, which
outline its commitment to driving consistent, sustainable and
profitable growth. The strategic choices include:
- Find and Amplify Consumer Tailwinds: The Company will
innovate within its existing brand portfolio while also
strategically expanding into adjacencies that complement its
current brands and tap into consumer growth spaces.
- Build Brands on Multiple Growth Horizons: The Company
will gain market share by building and managing brands at different
stages of growth across the portfolio, as well as through M&A
and business development to benefit both individual brands and the
enterprise.
- Leverage Platforms for Speed to Scale and Efficiency:
The Company will leverage its strategic platforms, which provide a
unique set of large-scale capabilities to enable its brands to
connect more directly with consumers and operate more efficiently,
including consumer data and analytics, direct-to-consumer (DTC)
centric supply chain, digitally enabled seamless consumer
experience and international platforms.
- Resource for Portfolio Agility and Performance: The
Company will continue to manage its business with organizational
agility and dynamically allocate capital and deploy people to drive
its highest-priority strategic and growth-focused
initiatives.
FY27 Financial Targets
- Revenue through FY27 is expected to grow at a five-year
CAGR of mid- to high single digit % (in constant dollars) with all
brands, regions and channels contributing to growth over that time.
- The North Face® brand revenue five-year CAGR expected to be up
high single to low double-digit % (in constant dollars).
- Vans® brand revenue five-year CAGR expected to be up mid-single
digit % (in constant dollars).
- Timberland® brand revenue five-year CAGR expected to up
mid-single digit % (in constant dollars).
- Dickies® brand revenue five-year CAGR expected to up high
single digit % (in constant dollars).
- Supreme® brand revenue five-year CAGR expected to up high
single to low double-digit % (in constant dollars).
- Outdoor emerging brands1 revenue five-year CAGR expected to up
mid- to high teens % (in constant dollars).
- Operating margin is expected to reach approximately 15%
by FY27, representing a low double-digit 5-year operating profit
CAGR (in constant dollars), driven by both gross margin expansion
and SG&A leverage.
- Tax rate is expected to be 17% to 18% in FY27,
increasing gradually from approximately 16% in FY23.
- EPS is expected to grow at a five-year CAGR of
high-single to low double-digit % (in constant dollars), (vs FY22
adjusted EPS of $3.18).
- Free cash flow2 generation is projected to be
approximately $5.5 billion (cumulative from FY23 to FY27) with a
total of approximately $7 billion in cash expected to be available
to return to shareholders through dividends and share
repurchases.
- Organic TSR through FY27 is anticipated to grow at a
five-year CAGR of between low double-digit and low teens %.
Q2’FY23 and FY23 Financial Outlook
- Q2’FY23 revenue expected to be up low single digit % (in
constant dollars) and adjusted EPS expected to be in the range of
$0.70 to $0.75.
- VF is revising its FY23 outlook due to lower-than-expected
Q2’FY23 results, coupled with ongoing uncertainty in the current
environment, weaker than anticipated back-to-school performance at
Vans® and increasing inventories leading to a more promotional
environment in North America in the fall; the revised outlook
includes the following:
- Total VF revenue is expected to be up about +5% to 6% (in
constant dollars) versus previous outlook of at least +7%.
- Vans® brand revenue is expected to be down mid-single digit %
(in constant dollars) versus previous outlook of up mid-single
digit %.
- The North Face® brand revenue is expected to deliver at least
low double-digit % growth (in constant dollars) versus previous
outlook of up low double digit %.
- Adjusted gross margin is expected to be down approximately 50
basis points versus previous outlook of up slightly.
- Adjusted operating margin is expected to be approximately 12%
versus previous outlook of approximately 13.2%.
- Adjusted EPS is expected to be in the range of $2.60 to $2.70,
versus $3.18 in the prior year and compared to previous outlook of
$3.05 to $3.15.
- Adjusted cash flow from operations of approximately $1.0
billion (versus previous outlook of approximately $1.2 billion) are
anticipated; Capital expenditures expected to be approximately $240
million (versus previous outlook of approximately $250
million).
- 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.
Supreme Impairment
The Company is testing the Supreme Trademark and Goodwill values
during the second quarter due to a triggering event that is the
result of higher interest rates and foreign currency fluctuations,
which are expected to negatively affect the estimated fair values.
As a result, and driven by these non-operating factors, the company
expects to record a non-cash charge during Fiscal Q2 in the range
of $300 million to $450 million.
Webcast Information
The event is being broadcast live via the internet, accessible
at vfc.com/investor-day-2022 beginning at approximately 10:30am
until 2:30pm ET today. An archived version will be available at the
same location following the event.
Presentation
All presentations will be available at vfc.com/investor-day-2022
beginning at approximately 10:15am ET today and will be archived at
the same location.
About VF
Founded in 1899, VF Corporation is one of the world’s largest
active-lifestyle companies which connects people to the activities
and experiences they cherish most through a portfolio of outdoor,
active, workwear and streetwear 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.
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 previously
disclosed with the IRS regarding the Timberland acquisition in
2011, has been excluded from FY23 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.
_____________________________
1 Outdoor Emerging Brands defined as Altra, Smartwool® and
Icebreaker®
2 Free Cash Flow defined as cash from operations less capital
expenditures and software purchases
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220928005186/en/
Investor Contact: Allegra
Perry ir@vfc.com
Media Contact: Colin Wheeler
corporate_communications@vfc.com
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