- Revenue from continuing operations increased 23 percent (up
21 percent in constant dollars) to $3.2 billion; excluding
acquisitions, revenue increased 19 percent (up 17 percent in
constant dollars);
- Active segment revenue increased 16 percent (up 14 percent
in constant dollars) including an 8 percent (7 percent in constant
dollars) increase in Vans® brand revenue and an 8 percentage
point revenue growth contribution from acquisitions; Outdoor
segment revenue increased 31 percent (up 28 percent in constant
dollars) including a 31 percent (29 percent in constant dollars)
increase in The North Face® brand revenue; Work segment
revenue increased 18 percent (up 17 percent in constant dollars)
including a 21 percent (19 percent in constant dollars) increase in
Dickies® brand revenue;
- International revenue increased 18 percent (up 15 percent in
constant dollars) including a 2 percentage point revenue growth
contribution from acquisitions; Europe revenue increased 19 percent
(up 17 percent in constant dollars); Greater China revenue
increased 9 percent (up 3 percent in constant dollars), including a
9 percent (2 percent in constant dollars) increase in Mainland
China;
- Direct-to-Consumer revenue increased 32 percent (up 31
percent in constant dollars) including an 11 percentage point
revenue growth contribution from acquisitions; Digital revenue
increased 24 percent (up 22 percent in constant dollars) versus the
prior year including a 19 percentage point revenue growth
contribution from acquisitions; excluding acquisitions, Digital
revenue increased 54 percent versus the second quarter of fiscal
2020;
- Gross margin from continuing operations increased 290 basis
points to 53.7 percent; on an adjusted basis, gross margin
increased 300 basis points to 53.9 percent including a 20 basis
point positive impact from acquisitions;
- Operating income from continuing operations on a reported
basis was $558 million; on an adjusted basis, operating income from
continuing operations increased 56 percent (53 percent in constant
dollars) to $534 million including an $8 million contribution from
acquisitions;
- Earnings per share from continuing operations was $1.18;
adjusted earnings per share from continuing operations increased 66
percent (up 63 percent in constant dollars) to $1.11 including a
$0.02 per share contribution from acquisitions;
- Full year fiscal 2022 revenue is now expected to be
approximately $12.0 billion, reflecting growth of around 30
percent, including an approximate $600 million contribution from
the Supreme® brand; full year fiscal 2022 adjusted earnings per
share is expected to be around $3.20, including an approximate
$0.25 contribution from the Supreme® brand.
VF Corporation (NYSE: VFC) today reported financial results for
its second quarter ended October 2, 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.
"As we move through the halfway point of our fiscal year, I
remain encouraged by the underlying momentum across the portfolio,
and the broad-based nature of this strength gives me confidence
that we are driving the right strategy to accelerate growth in the
quarters ahead,” said Steve Rendle, VF's Chairman, President and
CEO. "While the recovery has been impacted by further
pandemic-related disruptions, we continue to see accelerating
demand signals across our business, and our ability to reaffirm our
Fiscal 2022 revenue and earnings outlook is a clear testament to
the resiliency and optionality of our model.”
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 $35 million in the second quarter of
fiscal 2022 and $108 million in the first six months of fiscal
2022, and integration costs of approximately $1 million in the
second quarter of fiscal 2022 and $6 million in the first six
months 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 $10 million in the second quarter of fiscal 2022 and
$24 million in the first six months of fiscal 2022.
Combined, the above items positively impacted earnings per share
by $0.07 during the second quarter of fiscal 2022 and $0.19 during
the first six months 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 second quarter. Additionally, continued port
congestion, equipment availability and other logistics challenges
have contributed to increasing 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, no stores were closed during second quarter.
Currently, all stores are open.
In the EMEA region, no stores were closed during second quarter.
Currently, all stores are open.
In the APAC region, including Mainland China, 5% of stores were
closed at the beginning of the second quarter. Stores have since
re-opened and nearly all stores are open at the end of the
quarter.
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.
Second Quarter Fiscal 2022 Income Statement Review
- Revenue increased 23 percent (up 21 percent in constant
dollars) to $3.2 billion. Excluding the impact of acquisitions,
revenue increased 19 percent (up 17 percent in constant dollars)
driven by the EMEA and North American regions, which experienced a
negative impact from COVID-19 in the prior year period. VF's
wholesale business continues to be materially impacted by the
timing of shipments due to port delays and logistics
challenges.
- Gross margin increased 290 basis points to 53.7 percent,
primarily driven by reduced promotional activity. On an adjusted
basis, gross margin increased 300 basis points, including a 20
basis point positive impact from acquisitions, to 53.9
percent.
- Operating income on a reported basis was $558 million.
On an adjusted basis, operating income increased 56 percent (53
percent in constant dollars) to $534 million, including an $8
million contribution from acquisitions. Operating margin on
a reported basis was 17.5 percent. Adjusted operating margin
increased 360 basis points, including a 30 basis point negative
impact from acquisitions, to 16.7 percent.
- Earnings per share was $1.18 on a reported basis. On an
adjusted basis, earnings per share increased 66 percent (up 63
percent in constant dollars) to $1.11, including a $0.02
contribution from acquisitions.
Balance Sheet Highlights
Inventories were up 2 percent compared with the same period last
year. During the quarter, VF returned approximately $192 million of
cash to shareholders through dividends. VF is reinstating its share
repurchase program, under which it is authorized to repurchase up
to $2.8 billion of its common stock. This plan was suspended on
April 7, 2020 as a precaution due to the COVID-19 pandemic.
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 and
related governmental actions and regulations. VF's full year fiscal
2022 outlook includes the following:
- Revenue is expected to be approximately $12.0 billion,
reflecting growth of around 30 percent, including an approximate
$600 million contribution from the Supreme® brand. By segment,
revenue for Outdoor is now expected to increase between 25
percent and 27 percent versus the previous expectation of a 24 to
26 percent increase; revenue for Active is now expected to
increase between 35 percent and 37 percent versus the previous
expectation of a 37 to 39 percent increase; revenue for Work
is now expected to increase between 19 and 21 percent versus the
previous expectation of a 16 to 18 percent increase.
- International revenue is expected to increase between 24
percent and 26 percent. By geographic region, in the EMEA region,
revenue is expected to increase between 30 percent and 32 percent.
In the Asia Pacific region, revenue is expected to increase between
12 percent and 14 percent. And, in the Americas (non-U.S.) region,
revenue is expected to increase between 30 percent and 32
percent.
- Direct-to-consumer revenue is now expected to increase
between 34 percent and 36 percent versus the previous expectation
of 39 percent and 41 percent, including Digital revenue
growth of about 20 percent versus the previous expectation of 29
and 31 percent.
- Adjusted gross margin is expected to be around 56.0
percent, which represents an estimated increase of around 270 basis
points.
- Adjusted operating margin is expected to increase around
500 basis points to around 13.0 percent.
- Adjusted earnings per share is expected to be around
$3.20, including an approximate $0.25 contribution from the
Supreme® brand.
- 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 $0.50
per share, payable on December 20, 2021, to shareholders of record
on December 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 second 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 second 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
September
Six Months Ended
September
2021
2020
2021
2020
Net revenues
$
3,198,235
$
2,608,324
$
5,392,792
$
3,684,617
Costs and operating expenses
Cost of goods sold
1,479,446
1,282,406
2,434,997
1,789,357
Selling, general and administrative
expenses
1,160,303
1,005,970
2,196,425
1,822,121
Total costs and operating expenses
2,639,749
2,288,376
4,631,422
3,611,478
Operating income
558,486
319,948
761,370
73,139
Interest, net
(34,370
)
(30,931
)
(67,145
)
(58,880
)
Other income (expense), net
7,549
4,644
16,590
(33,543
)
Income (loss) from continuing
operations before income taxes
531,665
293,661
710,815
(19,284
)
Income tax expense
67,612
50,415
92,790
15,212
Income (loss) from continuing
operations
464,053
243,246
618,025
(34,496
)
Income from discontinued operations,
net of tax
—
13,476
170,273
5,605
Net income (loss)
$
464,053
$
256,722
$
788,298
$
(28,891
)
Earnings (loss) per common share -
basic (a)
Continuing operations
$
1.18
$
0.62
$
1.58
$
(0.09
)
Discontinued operations
—
0.03
0.43
0.01
Total earnings (loss) per common share
- basic
$
1.18
$
0.66
$
2.01
$
(0.07
)
Earnings (loss) per common share -
diluted (a)
Continuing operations
$
1.18
$
0.62
$
1.57
$
(0.09
)
Discontinued operations
—
0.03
0.43
0.01
Total earnings (loss) per common share
- diluted
$
1.18
$
0.66
$
2.00
$
(0.07
)
Weighted average shares
outstanding
Basic
391,779
389,219
391,565
388,957
Diluted
394,017
391,180
394,072
390,986
Cash dividends per common share
$
0.49
$
0.48
$
0.98
$
0.96
* Calculation not meaningful
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 September 2021 relate to the 13-week
and 26-week fiscal periods ended October 2, 2021 and all references
to periods ended September 2020 relate to the 13-week and 26-week
fiscal periods ended September 26, 2020. References to March 2021
relate to information as of April 3, 2021.
(a) Amounts have been calculated using
unrounded numbers.
VF CORPORATION
Condensed Consolidated Balance
Sheets
(Unaudited)
(In thousands)
September
March
September
2021
2021
2020
ASSETS
Current assets
Cash and equivalents
$
1,360,138
$
815,750
$
1,877,398
Accounts receivable, net
1,787,331
1,298,020
1,606,479
Inventories
1,464,714
1,061,839
1,434,843
Short-term investments
—
598,806
800,000
Other current assets
357,687
423,877
408,809
Current assets of discontinued
operations
—
587,578
552,677
Total current assets
4,969,870
4,785,870
6,680,206
Property, plant and equipment,
net
1,011,415
975,876
933,990
Goodwill and intangible assets,
net
5,434,009
5,454,972
3,024,607
Operating lease right-of-use
assets
1,380,106
1,474,434
1,385,121
Other assets
1,093,687
1,062,877
917,342
Total assets
$
13,889,087
$
13,754,029
$
12,941,266
LIABILITIES AND STOCKHOLDERS'
EQUITY
Current liabilities
Short-term borrowings
$
10,173
$
11,061
$
13,237
Current portion of long-term debt
1,001,037
1,023
1,127
Accounts payable
534,365
463,208
450,109
Accrued liabilities
1,838,790
1,609,928
1,505,703
Current liabilities of discontinued
operations
—
125,257
114,356
Total current liabilities
3,384,365
2,210,477
2,084,532
Long-term debt
4,682,751
5,709,149
5,679,440
Operating lease liabilities
1,146,944
1,236,461
1,129,840
Other liabilities
1,076,546
1,541,778
1,102,216
Total liabilities
10,290,606
10,697,865
9,996,028
Stockholders' equity
3,598,481
3,056,164
2,945,238
Total liabilities and stockholders'
equity
$
13,889,087
$
13,754,029
$
12,941,266
VF CORPORATION
Condensed Consolidated
Statements of Cash Flows
(Unaudited)
(In thousands)
Six Months Ended
September
2021
2020
Operating activities
Net income (loss)
$
788,298
$
(28,891
)
Income from discontinued operations, net
of tax
170,273
5,605
Income (loss) from continuing operations,
net of tax
618,025
(34,496
)
Depreciation and amortization
134,553
138,853
Reduction in the carrying amount of
right-of-use assets
208,687
205,635
Other adjustments
(1,138,492
)
(270,482
)
Cash provided (used) by operating
activities - continuing operations
(177,227
)
39,510
Cash provided by operating activities -
discontinued operations
6,090
43,298
Cash provided (used) by operating
activities
(171,137
)
82,808
Investing activities
Business acquisitions, net of cash
received
3,760
—
Proceeds from sale of businesses, net of
cash sold
616,529
—
Purchases of short-term investments
—
(800,000
)
Proceeds from sale of short-term
investments
598,806
—
Capital expenditures
(144,582
)
(112,501
)
Software purchases
(42,119
)
(38,345
)
Other, net
20,491
(3,839
)
Cash provided (used) by investing
activities - continuing operations
1,052,885
(954,685
)
Cash used by investing activities -
discontinued operations
(525
)
(2,693
)
Cash provided (used) by investing
activities
1,052,360
(957,378
)
Financing activities
Net increase (decrease) from short-term
borrowings and long-term debt
(1,397
)
1,758,317
Cash dividends paid
(384,427
)
(373,638
)
Proceeds from issuance of Common Stock,
net of (payments) for tax withholdings
25,971
(7,221
)
Cash provided (used) by financing
activities
(359,853
)
1,377,458
Effect of foreign currency rate changes
on cash, cash equivalents and restricted cash
(10,958
)
(8,082
)
Net change in cash, cash equivalents
and restricted cash
510,412
494,806
Cash, cash equivalents and restricted
cash – beginning of year
851,205
1,411,322
Cash, cash equivalents and restricted
cash – end of period
$
1,361,617
$
1,906,128
VF CORPORATION
Supplemental Financial
Information
Reportable Segment
Information
(Unaudited)
(In thousands)
Three Months Ended
September
% Change
% Change Constant Currency
(a)
% Change Organic (b)
% Change Constant Currency and
Organic (a) (b)
2021
2020
Segment revenues
Outdoor
$
1,506,621
$
1,154,407
31
%
28
%
31
%
28
%
Active
1,392,173
1,200,202
16
%
14
%
8
%
6
%
Work
299,163
253,551
18
%
17
%
18
%
17
%
Other (c)
278
164
*
*
*
*
Total segment revenues
$
3,198,235
$
2,608,324
23
%
21
%
19
%
17
%
Segment profit (loss)
Outdoor
$
284,076
$
132,475
Active
284,349
259,123
Work
61,973
8,173
Other (c)
(370
)
(2,526
)
Total segment profit
630,028
397,245
Corporate and other expenses
(63,993
)
(72,653
)
Interest, net
(34,370
)
(30,931
)
Income from continuing operations
before income taxes
$
531,665
$
293,661
(a) Refer to constant currency definition
on the following pages.
(b) Excludes acquisition representing the
operating results of Supreme for the three months ended September
2021. Refer to Non-GAAP financial information on "Reconciliation of
Select GAAP Measures to Non-GAAP Measures - Three and Six Months
Ended September 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 and sourcing activities related to transition
services.
* Calculation not meaningful
VF CORPORATION
Supplemental Financial
Information
Reportable Segment
Information
(Unaudited)
(In thousands)
Six Months Ended
September
% Change
% Change Constant Currency
(a)
% Change Organic (b)
% Change Constant Currency and
Organic (a) (b)
2021
2020
Segment revenues
Outdoor
$
2,124,375
$
1,495,635
42
%
38
%
42
%
38
%
Active
2,694,241
1,771,518
52
%
48
%
38
%
34
%
Work
573,898
415,981
38
%
36
%
38
%
36
%
Other (c)
278
1,483
*
*
*
*
Total segment revenues
$
5,392,792
$
3,684,617
46
%
43
%
40
%
36
%
Segment profit (loss)
Outdoor
$
212,329
$
(28,236
)
Active
555,211
266,259
Work
102,977
(3,228
)
Other (c)
(652
)
(4,887
)
Total segment profit
869,865
229,908
Corporate and other expenses
(91,905
)
(190,312
)
Interest, net
(67,145
)
(58,880
)
Income (loss) from continuing
operations before income taxes
$
710,815
$
(19,284
)
(a) Refer to constant currency definition
on the following pages.
(b) Excludes acquisition representing the
operating results of Supreme for the six months ended September
2021. Refer to Non-GAAP financial information on "Reconciliation of
Select GAAP Measures to Non-GAAP Measures - Three and Six Months
Ended September 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 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 September
2021
As Reported under GAAP
Adjust for Foreign Currency
Exchange
Constant Currency
Segment revenues
Outdoor
$
1,506,621
$
(24,735
)
$
1,481,886
Active
1,392,173
(19,140
)
1,373,033
Work
299,163
(3,727
)
295,436
Other
278
—
278
Total segment revenues
$
3,198,235
$
(47,602
)
$
3,150,633
Segment profit (loss)
Outdoor
$
284,076
$
(6,309
)
$
277,767
Active
284,349
(3,875
)
280,474
Work
61,973
(1,257
)
60,716
Other
(370
)
(27
)
(397
)
Total segment profit
630,028
(11,468
)
618,560
Corporate and other expenses
(63,993
)
389
(63,604
)
Interest, net
(34,370
)
—
(34,370
)
Income from continuing operations
before income taxes
$
531,665
$
(11,079
)
$
520,586
Diluted earnings per share
growth
89
%
(3
)%
86
%
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)
Six Months Ended September
2021
As Reported under GAAP
Adjust for Foreign Currency
Exchange
Constant Currency
Segment revenues
Outdoor
$
2,124,375
$
(54,948
)
$
2,069,427
Active
2,694,241
(66,956
)
2,627,285
Work
573,898
(8,753
)
565,145
Other
278
—
278
Total segment revenues
$
5,392,792
$
(130,657
)
$
5,262,135
Segment profit (loss)
Outdoor
$
212,329
$
(5,084
)
$
207,245
Active
555,211
(14,714
)
540,497
Work
102,977
(2,069
)
100,908
Other
(652
)
(55
)
(707
)
Total segment profit
869,865
(21,922
)
847,943
Corporate and other expenses
(91,905
)
1,117
(90,788
)
Interest, net
(67,145
)
—
(67,145
)
Income from continuing operations
before income taxes
$
710,815
$
(20,805
)
$
690,010
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 Six Months Ended
September 2021
(Unaudited)
(In thousands, except per
share amounts)
Three Months Ended September
2021
As Reported
under GAAP
Transaction and
Deal Related
Activities (a)
Specified
Strategic
Business
Decisions (b)
Adjusted
Contribution
from
Acquisition (c)
Adjusted
Organic
Revenues
$
3,198,235
$
—
$
—
$
3,198,235
$
(99,574
)
$
3,098,661
Gross profit
1,718,789
—
5,868
1,724,657
(59,385
)
1,665,272
Percent
53.7
%
53.9
%
53.7
%
Operating income
558,486
(33,886
)
9,738
534,338
(7,984
)
526,354
Percent
17.5
%
16.7
%
17.0
%
Diluted earnings per share from
continuing operations (d)
1.18
(0.09
)
0.02
1.11
(0.02
)
1.09
Six Months Ended September 2021
As Reported
under GAAP
Transaction and
Deal Related
Activities (a)
Specified
Strategic
Business
Decisions (b)
Adjusted
Contribution
from
Acquisition (c)
Adjusted
Organic
Revenues
$
5,392,792
$
—
$
—
$
5,392,792
$
(245,305
)
$
5,147,487
Gross profit
2,957,795
—
12,069
2,969,864
(148,194
)
2,821,670
Percent
54.8
%
55.1
%
54.8
%
Operating income
761,370
(102,482
)
23,862
682,750
(39,673
)
643,077
Percent
14.1
%
12.7
%
12.5
%
Diluted earnings per share from
continuing operations (d)
1.57
(0.24
)
0.05
1.38
(0.08
)
1.30
(a) Transaction and deal related
activities include activities associated with the acquisition of
Supreme Holdings, Inc. ("Supreme") for the three and six months
ended September 2021. Transaction and deal related activities
include a decrease in the estimated fair value of the contingent
consideration liability of $35.0 million and $108.0 million for the
three and six months ended September 2021, respectively, and
integration costs of $1.1 million and $5.5 million for the three
and six months ended September 2021, respectively. The transaction
and deal related activities resulted in a net tax benefit of $1.2
million and net tax expense of $8.3 million in the three and six
months ended September 2021, respectively, primarily related to the
impact of the decreases in the estimated fair value of the
contingent consideration liability on the interim tax rate
calculations.
(b) Specified strategic business decisions
for the three and six months ended September 2021 include costs
related to VF's business model transformation of $0.2 million and
$1.7 million in the three and six months ended September 2021,
respectively, 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 $13.3 million and $21.8 million in the three and six
months ended September 2021, respectively. Specified strategic
business decisions also include cost optimization charges and other
activities, including the sale of certain assets, indirectly
related to the divestiture of the Occupational Workwear business,
which totaled income of $3.8 million and costs of $0.4 million
during the three and six months ended September 2021, respectively.
The specified strategic business decisions also include
non-operating income of $1.7 million during the three and six
months ended September 2021 associated with VF's transformation
initiatives. The specified strategic business decisions resulted in
a net tax benefit of $1.0 million and $3.2 million in the three and
six months ended September 2021, respectively.
(c) The contribution from acquisition
represents the operating results of Supreme for the three and six
months ended September 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 394,017,000 and 394,072,000 weighted
average common shares for the three and six months ended September
2021, respectively.
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 and six months ended September 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 and Six Months Ended
September 2020
(Unaudited)
(In thousands, except per
share amounts)
Three Months Ended September
2020
As Reported
under GAAP
Transaction and
Deal Related Costs (a)
Specified Strategic
Business Decisions (b)
Adjusted
Revenues
$
2,608,324
$
—
$
—
$
2,608,324
Gross profit
1,325,918
—
1,646
1,327,564
Percent
50.8
%
50.9
%
Operating income
319,948
42
21,516
341,506
Percent
12.3
%
13.1
%
Diluted earnings per share from
continuing operations (c)
0.62
—
0.04
0.67
Six Months Ended September 2020
As Reported
under GAAP
Transaction and
Deal Related Costs(a)
Specified Strategic
Business Decisions (b)
Adjusted
Revenues
$
3,684,617
$
—
$
—
$
3,684,617
Gross profit
1,895,260
410
14,663
1,910,333
Percent
51.4
%
51.8
%
Operating income
73,139
452
37,485
111,076
Percent
2.0
%
3.0
%
Diluted earnings (loss) per share from
continuing operations (c)
(0.09
)
—
0.19
0.10
(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 six months ended
September 2020.
(b) Specified strategic business decisions
for the three and six months ended September 2020 include cost
optimization activity and other charges indirectly related to the
strategic review of the Occupational Workwear business, which
totaled $20.2 million and $33.2 million during the three and six
months ended September 2020, respectively. The costs also include
$1.1 million and $4.0 million for the three and six months ended
September 2020, respectively, for jeanswear wind down activities in
South America after 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. The six months ended
September 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 $4.1 million and $6.0 million in
the three and six months ended September 2020, respectively.
(c) Amounts shown in the table have been
calculated using unrounded numbers. The diluted earnings per share
impacts were calculated using 391,180,000 and 390,986,000 weighted
average common shares for the three and six months ended September
2020, 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 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 September
2021
Six Months Ended September
2021
Top 4 Brand Revenue Growth
Americas
EMEA
APAC
Global
Americas
EMEA
APAC
Global
Vans®
% change
10
%
10
%
(2
)%
8
%
49
%
46
%
13
%
41
%
% change constant currency*
9
%
7
%
(7
)%
7
%
48
%
38
%
6
%
37
%
The North Face®
% change
24
%
44
%
30
%
31
%
36
%
67
%
31
%
45
%
% change constant currency*
23
%
40
%
23
%
29
%
35
%
59
%
23
%
41
%
Timberland®
% change
47
%
11
%
6
%
26
%
64
%
24
%
(2
)%
38
%
% change constant currency*
46
%
10
%
1
%
25
%
62
%
19
%
(7
)%
34
%
Dickies®
% change
34
%
(16
)%
10
%
21
%
55
%
(9
)%
9
%
36
%
% change constant currency*
34
%
(18
)%
5
%
19
%
55
%
(13
)%
3
%
34
%
*Refer to constant currency definition on
previous pages.
VF CORPORATION
Supplemental Financial
Information
Geographic and Channel Revenue
Information
(Unaudited)
Three Months Ended September
2021
% Change
% Change Constant
Currency*
% Change Organic (a)
% Change Constant Currency and
Organic*(a)
Geographic
Revenue Growth
U.S.
27
%
27
%
22
%
22
%
EMEA
19
%
17
%
17
%
15
%
APAC
13
%
8
%
7
%
2
%
Greater China
9
%
3
%
9
%
3
%
Americas (non-U.S.)
29
%
22
%
29
%
22
%
International
18
%
15
%
16
%
12
%
Global
23
%
21
%
19
%
17
%
Six Months Ended September
2021
% Change
% Change Constant
Currency*
% Change Organic (a)
% Change Constant Currency and
Organic*(a)
Geographic
Revenue Growth
U.S.
56
%
56
%
47
%
47
%
EMEA
43
%
37
%
40
%
34
%
APAC
21
%
14
%
12
%
6
%
Greater China
13
%
5
%
13
%
5
%
Americas (non-U.S.)
59
%
47
%
59
%
47
%
International
37
%
30
%
32
%
25
%
Global
46
%
43
%
40
%
36
%
Three Months Ended September
2021
% Change
% Change Constant
Currency*
% Change Organic (a)
% Change Constant Currency and
Organic*(a)
Channel Revenue
Growth
Wholesale (b)
17
%
16
%
17
%
16
%
Direct-to-consumer
32
%
31
%
21
%
20
%
Digital
24
%
22
%
5
%
3
%
Six Months Ended September
2021
% Change
% Change Constant
Currency*
% Change Organic (a)
% Change Constant Currency and
Organic*(a)
Channel Revenue
Growth
Wholesale (b)
40
%
36
%
40
%
36
%
Direct-to-consumer
57
%
53
%
40
%
36
%
Digital
25
%
21
%
0
%
(3
)%
As of September
2021
2020
DTC Store
Count
Total
1,358
1,382
*Refer to constant currency definition on
previous pages.
(a) Excludes acquisition representing the
operating results of Supreme for the three and six months ended
September 2021. Refer to Non-GAAP financial information on
"Reconciliation of Select GAAP Measures to Non-GAAP Measures -
Three and Six Months Ended September 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/20211022005068/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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