VF Corporation (NYSE: VFC) today reported financial results for
its fourth quarter (Q4'FY24) and fiscal year ended March 30, 2024
(FY24).
Bracken Darrell, President and CEO, said:
"In Q4, we made progress advancing our Reinvent transformation
program. We closed the fiscal year with further inventory
reductions helping us deliver $1 billion in operating cash flow and
over $800 million in free cash flow, exceeding our guidance. As we
move into fiscal year 2025, we will continue to execute our broader
turnaround plans, including driving continued momentum on our key
priorities, namely fixing the Americas, turning around Vans®,
reducing costs and paying down debt, while progressing on the
actions resulting from our strategic portfolio review. We have been
rebuilding the leadership team, including the announcement of the
CFO appointment, and I feel energized that we are positioning VF to
return to sustainable and profitable growth."
Q4’FY24 Financial Review
- Revenue $2.4 billion, down 13%
- The North Face® down 5%, brand DTC up 6% (up 7% in constant
dollars), with ongoing US wholesale weakness
- Vans® down 26% (down 27% in constant dollars), largely
consistent with the prior quarter and includes the additional
impact from deliberate actions to further right-size inventories in
the wholesale channel
- Reported and adjusted gross margin 48.4%, down 120 basis points
- Adjusted gross margin benefits of 180 basis points from
favorable mix were more than offset by 300 basis points of
unfavorable rate, largely from the impact of reset actions and
ongoing promotional activity as well as negative transactional
foreign currency impacts
- Operating margin (15.0)%, down 910 basis points; adjusted
operating margin (2.1)%, down 770 basis points
- Adjusted operating margin reflects 650 basis points of
deleverage and 120 basis points of unfavorable adjusted gross
margin
- Generated gross cost savings through Reinvent of approximately
$40 million and incurred approximately $55 million of related
charges in Q4'FY24
- Earnings (loss) per share (EPS) $(1.08) vs. Q4'FY23 $(0.55);
Adjusted EPS $(0.32) vs. Q4'FY23 $0.17
FY24 Financial Review
- Revenue $10.5 billion, down 10% (down 11% in constant
dollars)
- Gross margin 52.0%, down 50 basis points; adjusted gross margin
52.1%, down 50 basis points
- Adjusted gross margin benefits of 90 basis points from
favorable mix were more than offset by 140 basis points of
unfavorable rate, which included 100 basis points of negative
transactional foreign currency impacts
- Operating margin (0.3)%, down 310 basis points; adjusted
operating margin 5.6%, down 420 basis points
- Adjusted operating margin reflects 370 basis points of
deleverage and 50 basis points of unfavorable adjusted gross
margin
- Generated gross cost savings through Reinvent of approximately
$80 million and incurred approximately $105 million of related
charges in FY24
- Earnings (loss) per share (EPS) $(2.49) vs. FY23 $0.31;
Adjusted EPS $0.74 vs. FY23 $2.10
Balance Sheet and Cash Flow Review
- Inventories decreased by $382 million during Q4'FY24, down 23%
versus the prior year
- Generated operating cash flow of $1.015 billion for the fiscal
year, with free cash flow of $804 million
- Net debt at the end of Q4'FY24 was $5.3 billion, down by
approximately $540 million relative to last year
FY25 Outlook
- Free cash flow plus the benefit of non-core asset sales is
expected to generate approximately $600 million
Summary Revenue
Information
(Unaudited)
Three Months Ended
March
Twelve Months Ended
March
(Dollars in millions)
2024
2023
% Change
% Change (constant currency)
2024
2023
% Change
% Change (constant currency)
Brand:
The North Face®
$
814.3
$
859.5
(5
)%
(5
)%
$
3,673.3
$
3,612.7
2
%
1
%
Vans®
631.2
857.0
(26
)%
(27
)%
2,785.7
3,682.9
(24
)%
(25
)%
Timberland®
341.5
395.6
(14
)%
(14
)%
1,556.9
1,784.7
(13
)%
(14
)%
Dickies®
162.4
191.5
(15
)%
(15
)%
618.4
725.2
(15
)%
(15
)%
Other Brands
424.4
436.0
(3
)%
(2
)%
1,820.3
1,807.0
1
%
0
%
VF Revenue
$
2,373.8
$
2,739.6
(13
)%
(13
)%
$
10,454.7
$
11,612.5
(10
)%
(11
)%
Region:
Americas
$
1,126.2
$
1,449.6
(22
)%
(23
)%
$
5,464.9
$
6,682.7
(18
)%
(19
)%
EMEA
869.9
901.3
(3
)%
(5
)%
3,428.6
3,411.7
0
%
(4
)%
APAC
377.7
388.7
(3
)%
2
%
1,561.2
1,518.1
3
%
7
%
VF Revenue
$
2,373.8
$
2,739.6
(13
)%
(13
)%
$
10,454.7
$
11,612.5
(10
)%
(11
)%
International
1,382.0
1,436.4
(4
)%
(4
)%
5,611.6
5,569.1
1
%
(1
)%
Channel:
DTC
$
1,093.8
$
1,148.8
(5
)%
(4
)%
$
4,965.1
$
5,231.4
(5
)%
(6
)%
Wholesale (a)
1,280.1
1,590.8
(20
)%
(20
)%
5,489.5
6,381.1
(14
)%
(15
)%
VF Revenue
$
2,373.8
$
2,739.6
(13
)%
(13
)%
$
10,454.7
$
11,612.5
(10
)%
(11
)%
All references to periods ended March 2024
relate to the 13-week and 52-week fiscal periods ended March 30,
2024 and all references to periods ended March 2023 relate to the
13-week and 52-week fiscal periods ended April 1, 2023.
Note: Amounts may not sum due to
rounding
(a) Royalty revenues are included in the
wholesale channel for all periods.
Shareholder Returns
- Returns of $35 million and $303 million to shareholders through
cash dividends in Q4'FY24 and full year FY24, respectively.
- VF’s Board of Directors declared a quarterly dividend of $0.09
per share. This dividend will be payable on June 20, 2024, to
shareholders of record at the close of business on June 10, 2024.
Subject to approval by its Board of Directors, VF intends to
continue to pay quarterly dividends.
Webcast Information
VF will host its fourth quarter fiscal 2024 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.
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.
Financial Presentation Disclosure
All per share amounts are presented on a diluted basis. This
release refers to “reported” and “constant dollar” or “constant
currency” amounts, terms that are described under the heading below
“Constant Currency - Excluding the Impact of Foreign Currency.”
Unless otherwise noted, “reported” and “constant dollar” or
“constant currency” amounts are the same. This release also refers
to “adjusted” amounts, a term that is described under the heading
below “Adjusted Amounts - Excluding Reinvent, Noncash Impairment
Charges, Tax and Legal Items, Transaction and Deal Related
Activities and Other.” Unless otherwise noted, “reported” and
“adjusted” amounts are the same.
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 both “constant dollar”
and “constant currency” 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.
Adjusted Amounts - Excluding Reinvent, Noncash Impairment
Charges, Tax and Legal Items, Transaction and Deal Related
Activities and Other
The adjusted amounts in this release exclude costs related to
Reinvent, VF's transformation program. Costs related to Reinvent
were approximately $55 million in the fourth quarter of fiscal 2024
and $105 million in fiscal 2024.
The adjusted amounts in this release exclude noncash goodwill
impairment charges related to the Timberland® and Icebreaker®
reporting units of approximately $250 million in the fourth quarter
of fiscal 2024 and goodwill impairment charges related to the
Timberland®, Dickies® and Icebreaker® reporting units of
approximately $508 million in fiscal 2024.
The adjusted amounts in this release exclude the impact to tax
expense resulting from the decision by the U.S. Court of Appeals
for the First Circuit on September 8, 2023 that upheld the U.S. Tax
Court’s decision in favor of the Internal Revenue Service regarding
the timing of income inclusion associated with VF’s acquisition of
The Timberland Company in September 2011. The adjusted amounts also
exclude the impact to tax expense resulting from the decision by
the General Court on September 20, 2023 that confirmed the decision
of the European Union that Belgium’s excess profit tax regime
amounted to illegal State aid. The net impact to tax expense was an
increase of approximately $696 million, excluding the reversal of
accrued interest income, in fiscal 2024, as a result of these two
rulings.
The adjusted amounts in this release exclude legal settlement
gains of approximately $29 million recorded in fiscal 2024.
The adjusted amounts in this release exclude transaction and
deal related activities and other primarily associated with the
review of strategic alternatives for the Global Packs business,
consisting of the Kipling®, Eastpak® and JanSport® brands. Total
transaction and deal related activities and other include costs of
approximately $2 million in fiscal 2024.
Combined, the above items negatively impacted earnings per share
by $0.76 during the fourth quarter of fiscal 2024 and $3.23 during
fiscal 2024. 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. VF defines
free cash flow as cash flow from operations less capital
expenditures and software purchases and defines net debt as short
and long-term borrowings less cash and cash equivalents.
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,”
"believe," “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: the
level of consumer demand for apparel and footwear; disruption to
VF’s distribution system; changes in global economic conditions and
the financial strength of VF’s consumers and customers, including
as a result of current inflationary pressures; fluctuations in the
price, availability and quality of raw materials and finished
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;
VF's ability to maintain the image, health and equity of its
brands, including through investment in brand building and product
innovation; intense competition from online retailers and other
direct-to-consumer business risks; increasing pressure on margins;
retail industry changes and challenges; VF's ability to execute our
Reinvent transformation program and other business priorities,
including measures to streamline and right-size our cost base and
strengthen the balance sheet while reducing leverage; VF’s ability
to successfully establish a global commercial organization, and
identify and capture efficiencies in our business model; any
inability of VF or third parties on which we rely, to maintain the
strength and security of information technology systems; the fact
that VF’s facilities and systems, and those of third parties on
which we rely, are frequent targets of cyber-attacks, and may in
the future be vulnerable to such attacks, and any inability or
failure by us or such third parties to anticipate or detect data or
information security breaches or other cyber-attacks, including the
cyber incident that was reported by VF in December 2023, could
result in data or financial loss, reputational harm, business
disruption, damage to our relationships with customers, consumers,
employees and third parties on which we rely, litigation,
regulatory investigations, enforcement actions or other negative
impacts; any inability by VF or third parties on which we rely to
properly collect, use, manage and secure business, consumer and
employee data and comply with privacy and security regulations;
VF’s ability to adopt new technologies, including artificial
intelligence, in a competitive and responsible manner; foreign
currency fluctuations; stability of VF's vendors' manufacturing
facilities and operations 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; actions of activist and other
shareholders; VF's ability to recruit, develop or retain key
executive or employee talent or successfully transition executives;
continuity of members of VF’s management; changes in the
availability and cost of labor; VF’s ability to protect trademarks
and other intellectual property rights; possible goodwill and other
asset impairment such as the impairment charges related to the
Timberland®, Dickies® and Icebreaker® reporting unit goodwill;
maintenance by VF’s licensees and distributors of the value of VF’s
brands; VF’s ability to execute acquisitions and divestitures,
integrate acquisitions and manage its brand portfolio; business
resiliency in response to natural or man-made economic, public
health, cyber, political or environmental disruptions; changes in
tax laws and additional tax liabilities; legal, regulatory,
political, economic, and geopolitical risks, including those
related to the current conflicts in Ukraine and the Middle East and
tensions between the U.S. and China; changes to laws and
regulations; adverse or unexpected weather conditions, including
any potential effects from climate change; VF's indebtedness and
its ability to obtain financing on favorable terms, if needed,
could prevent VF from fulfilling its financial obligations; VF's
ability to pay and declare dividends or repurchase its stock in the
future; climate change and increased focus on environmental, social
and governance issues; VF's ability to execute on its
sustainability strategy and achieve its sustainability-related
goals and targets; 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; 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
March
Twelve Months Ended
March
2024
2023
2024
2023
Net revenues
$
2,373,809
$
2,739,613
$
10,454,667
$
11,612,475
Costs and operating expenses
Cost of goods sold
1,225,277
1,381,589
5,017,445
5,515,796
Selling, general and administrative
expenses
1,253,827
1,205,820
4,963,718
5,033,977
Impairment of goodwill and intangible
assets
250,470
313,087
507,566
735,009
Total costs and operating expenses
2,729,574
2,900,496
10,488,729
11,284,782
Operating income (loss)
(355,765
)
(160,883
)
(34,062
)
327,693
Interest expense, net
(54,707
)
(49,237
)
(223,408
)
(164,632
)
Other income (expense), net
833
(5,879
)
23,785
(119,774
)
Income (loss) before income
taxes
(409,639
)
(215,999
)
(233,685
)
43,287
Income tax expense (benefit)
8,669
(1,107
)
735,197
(75,297
)
Net income (loss)
$
(418,308
)
$
(214,892
)
$
(968,882
)
$
118,584
Earnings (loss) per common share
(a)
Basic
$
(1.08
)
$
(0.55
)
$
(2.49
)
$
0.31
Diluted
$
(1.08
)
$
(0.55
)
$
(2.49
)
$
0.31
Weighted average shares
outstanding
Basic
388,559
388,062
388,360
387,763
Diluted
388,559
388,062
388,360
388,370
Cash dividends per common share
$
0.09
$
0.30
$
0.78
$
1.81
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 March 2024 relate to the 13-week and
52-week fiscal periods ended March 30, 2024 and all references to
periods ended March 2023 relate to the 13-week and 52-week fiscal
periods ended April 1, 2023.
(a) Amounts have been calculated using
unrounded numbers.
VF CORPORATION
Condensed Consolidated Balance
Sheets
(Unaudited)
(In thousands)
March
March
2024
2023
ASSETS
Current assets
Cash and equivalents
$
674,605
$
814,887
Accounts receivable, net
1,273,965
1,610,295
Inventories
1,766,366
2,292,790
Other current assets
512,011
434,737
Total current assets
4,226,947
5,152,709
Property, plant and equipment,
net
823,886
942,440
Goodwill and intangible assets,
net
4,088,896
4,621,234
Operating lease right-of-use
assets
1,330,361
1,372,182
Other assets
1,142,873
1,901,923
Total assets
$
11,612,963
$
13,990,488
LIABILITIES AND STOCKHOLDERS'
EQUITY
Current liabilities
Short-term borrowings
$
263,938
$
11,491
Current portion of long-term debt
1,000,721
924,305
Accounts payable
817,128
936,319
Accrued liabilities
1,375,192
1,673,651
Total current liabilities
3,456,979
3,545,766
Long-term debt
4,702,284
5,711,014
Operating lease liabilities
1,156,858
1,171,941
Other liabilities
638,477
651,054
Total liabilities
9,954,598
11,079,775
Stockholders' equity
1,658,365
2,910,713
Total liabilities and stockholders'
equity
$
11,612,963
$
13,990,488
VF CORPORATION
Condensed Consolidated
Statements of Cash Flows
(Unaudited)
(In thousands)
Twelve Months Ended
March
2024
2023
Operating activities
Net income (loss)
$
(968,882
)
$
118,584
Impairment of goodwill and intangible
assets
507,566
735,009
Depreciation and amortization
319,204
262,324
Reduction in the carrying amount of
right-of-use assets
394,426
383,199
Write-off of income tax receivables and
interest
921,409
—
Other adjustments, including changes in
operating assets and liabilities
(159,142
)
(2,154,911
)
Cash provided (used) by operating
activities
1,014,581
(655,795
)
Investing activities
Proceeds from sale of assets
26,615
99,499
Capital expenditures
(145,818
)
(165,925
)
Software purchases
(65,167
)
(95,326
)
Other, net
12,112
(26,301
)
Cash used by investing activities
(172,258
)
(188,053
)
Financing activities
Contingent consideration payment
—
(56,976
)
Net increase (decrease) from short-term
borrowings and long-term debt
(653,629
)
1,226,522
Cash dividends paid
(303,140
)
(702,846
)
Proceeds from issuance of Common Stock,
net of (payments) for tax withholdings
(2,846
)
(2,794
)
Cash provided (used) by financing
activities
(959,615
)
463,906
Effect of foreign currency rate changes
on cash, cash equivalents and restricted cash
(22,069
)
(80,822
)
Net change in cash, cash equivalents
and restricted cash
(139,361
)
(460,764
)
Cash, cash equivalents and restricted
cash – beginning of year
816,318
1,277,082
Cash, cash equivalents and restricted
cash – end of year
$
676,957
$
816,318
VF CORPORATION
Supplemental Financial
Information
Reportable Segment
Information
(Unaudited)
(In thousands)
Three Months Ended
March
% Change
% Change Constant Currency
(a)
2024
2023
Segment revenues
Outdoor
$
1,219,444
$
1,320,529
(8)%
(8)%
Active
914,037
1,131,885
(19)%
(19)%
Work
240,328
287,199
(16)%
(16)%
Total segment revenues
$
2,373,809
$
2,739,613
(13)%
(13)%
Segment profit (loss)
Outdoor
$
44,878
$
114,816
Active
476
113,520
Work
4,165
28,168
Other (b)
—
(20
)
Total segment profit
49,519
256,484
Impairment of goodwill and intangible
assets
(250,470
)
(313,087
)
Corporate and other expenses
(153,981
)
(110,159
)
Interest expense, net
(54,707
)
(49,237
)
Loss before income taxes
$
(409,639
)
$
(215,999
)
(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. Other primarily includes sourcing activities
related to transition services.
VF CORPORATION
Supplemental Financial
Information
Reportable Segment
Information
(Unaudited)
(In thousands)
Twelve Months Ended
March
% Change
% Change Constant Currency
(a)
2024
2023
Segment revenues
Outdoor
$
5,501,399
$
5,647,526
(3)%
(4)%
Active
4,061,729
4,904,622
(17)%
(18)%
Work
891,539
1,060,179
(16)%
(16)%
Other (b)
—
148
*
*
Total segment revenues
$
10,454,667
$
11,612,475
(10)%
(11)%
Segment profit (loss)
Outdoor
$
602,708
$
785,431
Active (c)
352,248
654,691
Work
17,647
121,157
Other (b)
—
(536
)
Total segment profit
972,603
1,560,743
Impairment of goodwill and intangible
assets
(507,566
)
(735,009
)
Corporate and other expenses
(475,314
)
(617,815
)
Interest expense, net
(223,408
)
(164,632
)
Income (loss) before income
taxes
$
(233,685
)
$
43,287
(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. Other primarily includes sourcing activities
related to transition services.
(c) Includes legal settlement gains of
$29.1 million in the twelve months ended March 2024.
* Calculation not meaningful
VF CORPORATION
Supplemental Financial
Information
Reportable Segment Information
– Constant Currency Basis
(Unaudited)
(In thousands)
Three Months Ended March
2024
As Reported
Adjust for Foreign
under GAAP
Currency Exchange
Constant Currency
Segment revenues
Outdoor
$
1,219,444
$
(634
)
$
1,218,810
Active
914,037
(1,381
)
912,656
Work
240,328
156
240,484
Total segment revenues
$
2,373,809
$
(1,859
)
$
2,371,950
Segment profit
Outdoor
$
44,878
$
33
$
44,911
Active
476
(1,098
)
(622
)
Work
4,165
(701
)
3,464
Total segment profit
49,519
(1,766
)
47,753
Impairment of goodwill
(250,470
)
—
(250,470
)
Corporate and other expenses
(153,981
)
(401
)
(154,382
)
Interest expense, net
(54,707
)
—
(54,707
)
Loss before income taxes
$
(409,639
)
$
(2,167
)
$
(411,806
)
Diluted earnings (loss) per share
growth
(94
)%
(1
)%
(95
)%
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
Reportable Segment Information
– Constant Currency Basis
(Unaudited)
(In thousands)
Twelve Months Ended March
2024
As Reported
Adjust for Foreign
under GAAP
Currency Exchange
Constant Currency
Segment revenues
Outdoor
$
5,501,399
$
(62,600
)
$
5,438,799
Active
4,061,729
(43,697
)
4,018,032
Work
891,539
(1,220
)
890,319
Total segment revenues
$
10,454,667
$
(107,517
)
$
10,347,150
Segment profit
Outdoor
$
602,708
$
(12,949
)
$
589,759
Active
352,248
(8,725
)
343,523
Work
17,647
(1,474
)
16,173
Total segment profit
972,603
(23,148
)
949,455
Impairment of goodwill
(507,566
)
—
(507,566
)
Corporate and other expenses
(475,314
)
(475
)
(475,789
)
Interest expense, net
(223,408
)
—
(223,408
)
Loss before income taxes
$
(233,685
)
$
(23,623
)
$
(257,308
)
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 and Twelve Months Ended March
2024
(Unaudited)
(In thousands, except per
share amounts)
Three Months Ended March 2024
As Reported
under GAAP
Reinvent (a)
Impairment Charges (b)
Tax & Legal Items
(c)
Transaction and Deal Related
Activities and Other (d)
Adjusted
Revenues
$
2,373,809
$
—
$
—
$
—
$
—
$
2,373,809
Gross profit
1,148,532
347
—
—
—
1,148,879
Percent
48.4
%
48.4
%
Operating loss
(355,765
)
54,517
250,470
—
22
(50,756
)
Percent
(15.0
)%
(2.1
)%
Diluted loss per share (e)
(1.08
)
0.12
0.64
—
—
(0.32
)
Twelve Months Ended March 2024
As Reported
under GAAP
Reinvent (a)
Impairment Charges (b)
Tax & Legal Items
(c)
Transaction and Deal Related
Activities and Other (d)
Adjusted
Revenues
$
10,454,667
$
—
$
—
$
—
$
—
$
10,454,667
Gross profit
5,437,222
4,591
—
—
—
5,441,813
Percent
52.0
%
52.1
%
Operating income (loss)
(34,062
)
105,386
507,566
—
2,471
581,361
Percent
(0.3
)%
5.6
%
Diluted earnings (loss) per share
(e)
(2.49
)
0.21
1.28
1.74
—
0.74
(a) Costs related to Reinvent, VF's
transformation program, were $54.5 million and $105.4 million in
the three and twelve months ended March 2024, respectively, related
primarily to severance and employee-related benefits and the net
impact of asset disposals and write-downs. Reinvent resulted in a
net tax benefit of $9.2 million and $22.2 million in the three and
twelve months ended March 2024, respectively.
(b) VF recognized noncash goodwill
impairment charges related to the Timberland and Icebreaker
reporting units of $211.7 million and $38.8 million, respectively,
during the three months ended March 2024. During the twelve months
ended March 2024, VF recognized noncash goodwill impairment charges
related to the Timberland, Dickies and Icebreaker reporting units
of $407.0 million, $61.8 million and $38.8 million, respectively.
The impairment charges resulted in a net tax benefit of $1.1
million and $9.2 million in the three and twelve months ended March
2024, respectively.
(c) Tax items include the impact to tax
expense resulting from the decision by the U.S. Court of Appeals
for the First Circuit on September 8, 2023 that upheld the U.S. Tax
Court’s decision in favor of the Internal Revenue Service regarding
the timing of income inclusion associated with VF’s acquisition of
The Timberland Company in September 2011. The net impact to tax
expense was an increase of approximately $670.3 million in the
twelve months ended March 2024, excluding the reversal of accrued
interest income, as a result of this decision. Tax items also
include the impact to tax expense resulting from the decision by
the General Court on September 20, 2023 that confirmed the decision
of the European Union that Belgium’s excess profit tax regime
amounted to illegal State aid. The net impact to tax expense was an
increase of approximately $26.1 million in the twelve months ended
March 2024, as a result of this ruling.
Legal items include legal settlement gains
of $29.1 million recorded in the twelve months ended March 2024
within the Other income (expense), net line item. The legal items
resulted in a net tax expense of $7.5 million in the twelve months
ended March 2024.
(d) Transaction and deal related
activities and other primarily reflect activities associated with
the review of strategic alternatives for the Global Packs business,
consisting of the Kipling®, Eastpak® and JanSport® brands, which
totaled $2.5 million for the twelve months ended March 2024. The
transaction and deal related activities and other resulted in a net
tax benefit of $0.6 million in the twelve months ended March
2024.
(e) Amounts shown in the table have been
calculated using unrounded numbers. The GAAP diluted earnings per
share was calculated using 388,559,000 and 388,360,000 weighted
average common shares for the three and twelve months ended March
2024, respectively. The adjusted diluted earnings per share impacts
were calculated using 388,559,000 and 389,328,000 weighted average
common shares for the three and twelve months ended March 2024,
respectively.
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 Reinvent, impairment charges, certain tax and legal
items, transaction and deal related activities and other. 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 and Twelve Months Ended March
2023
(Unaudited)
(In thousands, except per
share amounts)
Three Months Ended March 2023
As Reported
under GAAP
Transaction and Deal Related
Activities (a)
Specified Strategic Business
Decisions (b)
Impairments and Pension
Settlement Charge (c)
Tax Item (d)
Adjusted
Revenues
$
2,739,613
$
—
$
—
$
—
$
—
$
2,739,613
Gross profit
1,358,024
—
—
—
—
1,358,024
Percent
49.6
%
49.6
%
Operating income (loss)
(160,883
)
—
—
313,087
—
152,204
Percent
(5.9
)%
5.6
%
Diluted earnings (loss) per share
(e)
(0.55
)
—
—
0.72
—
0.17
Twelve Months Ended March 2023
As Reported
under GAAP
Transaction and Deal Related
Activities (a)
Specified Strategic Business
Decisions (b)
Impairments and Pension
Settlement Charge (c)
Tax Item (d)
Adjusted
Revenues
$
11,612,475
$
—
$
—
$
—
$
—
$
11,612,475
Gross profit
6,096,679
—
9,946
—
—
6,106,625
Percent
52.5
%
52.6
%
Operating income
327,693
331
72,031
735,009
—
1,135,064
Percent
2.8
%
9.8
%
Diluted earnings per share (e)
0.31
—
0.15
1.89
(0.24
)
2.10
(a) Transaction and deal related
activities include activities associated with the acquisition of
Supreme Holdings, Inc. and include integration costs of $0.3
million for the twelve months ended March 2023. The transaction and
deal related activities resulted in a net tax benefit of $0.1
million in the twelve months ended March 2023.
(b) Specified strategic business decisions
include costs related to VF's business model transformation of
$59.5 million during the twelve months ended March 2023, related
primarily to Corporate actions and resulting restructuring costs.
Specified strategic business decisions also include costs related
to a transformation initiative for our Asia-Pacific regional
operations of $12.5 million in the twelve months ended March 2023.
The specified strategic business decisions resulted in a net tax
benefit of $15.0 million in the twelve months ended March 2023.
(c) VF recognized noncash impairment
charges related to the Supreme reporting unit goodwill and
indefinite-lived trademark intangible asset of $313.1 million and
$735.0 million during the three and twelve months ended March 2023,
respectively. The second quarter impairment charges were driven by
non-operating factors including higher interest rates and foreign
currency fluctuations. The fourth quarter impairment charges were
related to lower financial projections and increased risk of
achieving management's forecasts.
A noncash pension settlement charge of
$91.8 million was recorded in the Other income (expense), net line
item during the twelve months ended March 2023. 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 impairment and pension settlement
charges resulted in a net tax benefit of $32.0 million and $92.2
million in the three and twelve months ended March 2023,
respectively.
(d) Tax item includes a $94.9 million
discrete tax benefit recognized during the twelve months ended
March 2023 related to the Internal Revenue Service examinations for
tax year 2017 and short-tax year 2018 resulting in a favorable
adjustment to VF's transition tax liability under the Tax Cuts and
Jobs Act.
(e) Amounts shown in the table have been
calculated using unrounded numbers. The GAAP diluted earnings per
share was calculated using 388,062,000 and 388,370,000 weighted
average common shares for the three and twelve months ended March
2023, respectively. The adjusted diluted earnings per share was
calculated using 388,409,000 and 388,370,000 weighted average
common shares for the three and twelve months ended March 2023,
respectively.
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, impairments, a
pension settlement charge and a tax item. 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 March
2024
Twelve Months Ended March
2024
Top 4 Brand Revenue Growth
Americas
EMEA
APAC
Global
Americas
EMEA
APAC
Global
The North Face®
% change
(15)%
(1)%
10%
(5)%
(10)%
9%
27%
2%
% change constant currency*
(15)%
(3)%
15%
(5)%
(10)%
5%
31%
1%
Vans®
% change
(31)%
(13)%
(31)%
(26)%
(28)%
(13)%
(24)%
(24)%
% change constant currency*
(32)%
(15)%
(28)%
(27)%
(29)%
(16)%
(22)%
(25)%
Timberland®
% change
(32)%
4%
7%
(14)%
(27)%
1%
7%
(13)%
% change constant currency*
(33)%
2%
12%
(14)%
(27)%
(3)%
10%
(14)%
Dickies®
% change
(17)%
(4)%
(26)%
(15)%
(15)%
6%
(35)%
(15)%
% change constant currency*
(17)%
(6)%
(21)%
(15)%
(15)%
1%
(32)%
(15)%
*Refer to constant currency definition on
previous pages.
VF CORPORATION
Supplemental Financial
Information
Geographic and Channel Revenue
Information
(Unaudited)
Three Months Ended March
2024
Twelve Months Ended March
2024
% Change
% Change Constant
Currency*
% Change
% Change Constant
Currency*
Geographic
Revenue Growth
Americas
(22)%
(23)%
(18)%
(19)%
EMEA
(3)%
(5)%
0%
(4)%
APAC
(3)%
2%
3%
7%
Greater China
5%
10%
9%
13%
International
(4)%
(4)%
1%
(1)%
Global
(13)%
(13)%
(10)%
(11)%
Three Months Ended March
2024
Twelve Months Ended March
2024
% Change
% Change Constant
Currency*
% Change
% Change Constant
Currency*
Channel Revenue
Growth
Wholesale (a)
(20)%
(20)%
(14)%
(15)%
Direct-to-consumer
(5)%
(4)%
(5)%
(6)%
Digital
(4)%
(4)%
(8)%
(8)%
As of March
2024
2023
DTC Store
Count
Total
1,185
1,265
*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/20240522140979/en/
Investor Contact: Allegra
Perry ir@vfc.com
Media Contact: Colin Wheeler
corporate_communications@vfc.com
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