- Revenue from continuing operations increased 22 percent (up
22 percent in constant dollars) to $3.6 billion; excluding
acquisitions, revenue increased 15 percent (up 16 percent in
constant dollars);
- Active segment revenue increased 25 percent (up 26 percent
in constant dollars) including an 8 percent (8 percent in constant
dollars) increase in Vans® brand revenue and a 17 percentage
point revenue growth contribution from acquisitions; Outdoor
segment revenue increased 23 percent (up 23 percent in constant
dollars) including a 28 percent (27 percent in constant dollars)
increase in The North Face® brand revenue; Work segment
revenue increased 6 percent (up 5 percent in constant dollars)
including a 4 percent (4 percent in constant dollars) increase in
Dickies® brand revenue;
- International revenue increased 19 percent (up 20 percent in
constant dollars) including a 5 percentage point revenue growth
contribution from acquisitions; Europe revenue increased 26 percent
(up 28 percent in constant dollars); Greater China revenue
decreased (6) percent (down (9) percent in constant dollars),
including an (8) percent ((12) percent in constant dollars)
decrease in Mainland China;
- Direct-to-Consumer revenue increased 30 percent (up 30
percent in constant dollars) including a 13 percentage point
revenue growth contribution from acquisitions; Digital revenue
increased 21 percent (up 21 percent in constant dollars) versus the
prior year including an 18 percentage point revenue growth
contribution from acquisitions; excluding acquisitions, Digital
revenue increased 61 percent versus the third quarter of fiscal
2020;
- Gross margin from continuing operations increased 140 basis
points to 56.1 percent; on an adjusted basis, gross margin
increased 60 basis points to 56.3 percent including a 20 basis
point positive impact from acquisitions;
- Operating income from continuing operations on a reported
basis was $678 million; on an adjusted basis, operating income from
continuing operations increased 40 percent (40 percent in constant
dollars) to $643 million including a $54 million contribution from
acquisitions;
- Earnings per share from continuing operations was $1.32;
adjusted earnings per share from continuing operations increased 45
percent (up 44 percent in constant dollars) to $1.35 including an
$0.11 per share contribution from acquisitions;
- Full year fiscal 2022 revenue is now expected to be
approximately $11.85 billion, reflecting growth of around 28
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 third quarter ended January 1, 2022. 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, Costs
Related to Specified Strategic Business Decisions and Tax Items.”
Unless otherwise noted, “reported” and “adjusted” amounts are the
same. This release also refers to amounts "excluding acquisitions"
or as "adjusted organic", which exclude the contribution from the
Supreme® brand.
"We delivered strong double-digit top and bottom line results
and returned about $500 million in cash to shareholders in the
third quarter, all of which has been achieved amidst continuing
macro headwinds,” said Steve Rendle, VF's Chairman, President and
CEO. "The broad-based momentum across our brands is testament to
the resilience of our diversified portfolio model, which has
enabled us to deliver a strong quarter and reaffirm our full year
earnings outlook in a challenging environment. I am confident that
VF remains well-positioned for continued, profitable, long-term
growth.”
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, Costs Related to Specified Strategic Business Decisions
and Tax Items
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 $50 million in the third quarter of
fiscal 2022 and $158 million in the first nine months of fiscal
2022, and integration costs of approximately $1 million in the
third quarter of fiscal 2022 and $6 million in the first nine
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 $14 million in the third quarter of fiscal 2022 and
$38 million in the first nine months of fiscal 2022.
The adjusted amounts in this release exclude approximately $52
million net tax expense associated with certain discrete tax
activities recognized during the third quarter and first nine
months of fiscal 2022.
Combined, the above items negatively impacted earnings per share
by $0.03 during the third quarter of fiscal 2022 and positively
impacted earnings per share by $0.17 during the first nine 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. COVID-19 related manufacturing capacity constraints have
continued during the third quarter, though the situation has
improved over time. VF expects to be back to nearly full capacity
in the coming weeks. Additionally, continued port congestion,
equipment availability and other logistics challenges have
contributed to ongoing 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 the third
quarter. Currently, all stores are open.
In the EMEA region, 6% of stores were closed during third
quarter. Currently, only one store is closed.
In the APAC region, including Mainland China, nearly all stores
were open at the beginning of the third quarter. No stores were
closed at the end of the quarter. Currently, 1% of stores are
closed.
VF is continuing to monitor the COVID-19 outbreak globally and
will comply with guidance from government entities and public
health authorities to prioritize the health and well-being of its
employees, customers, trade partners and consumers. As COVID-19
uncertainty continues, VF expects ongoing disruption to its
business operations.
Third Quarter Fiscal 2022 Income Statement Review
- Revenue increased 22 percent (up 22 percent in constant
dollars) to $3.6 billion. Excluding the impact of acquisitions,
revenue increased 15 percent (up 16 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.
- Gross margin increased 140 basis points to 56.1 percent,
primarily driven by reduced promotional activity and offsetting
incremental freight costs. On an adjusted basis, gross margin
increased 60 basis points, including a 20 basis point positive
impact from acquisitions, to 56.3 percent.
- Operating income on a reported basis was $678 million.
On an adjusted basis, operating income increased 40 percent (40
percent in constant dollars) to $643 million, including a $54
million contribution from acquisitions. Operating margin on
a reported basis was 18.7 percent. Adjusted operating margin
increased 230 basis points, including a 50 basis point positive
impact from acquisitions, to 17.7 percent.
- Earnings per share was $1.32 on a reported basis. On an
adjusted basis, earnings per share increased 45 percent (up 44
percent in constant dollars) to $1.35, including an $0.11
contribution from acquisitions.
Balance Sheet Highlights
Inventories were up 20 percent compared with the same period
last year. During the quarter, VF returned approximately $195
million of cash to shareholders through dividends. The company also
repurchased approximately $300 million of shares and has $2.5
billion remaining under its current share repurchase
authorization.
Full Year Fiscal 2022 Outlook
VF's full year outlook assumes no material deterioration to the
company's current business operations as a result of COVID-19 and
related governmental actions and regulations. VF's full year fiscal
2022 outlook includes the following:
- Revenue is expected to be approximately $11.85 billion,
reflecting growth of around 28 percent, including an approximate
$600 million contribution from the Supreme® brand. By segment,
revenue for Outdoor is now expected to increase between 26
percent and 28 percent versus the previous expectation of a 25 to
27 percent increase; revenue for Active is now expected to
increase between 31 percent and 33 percent versus the previous
expectation of a 35 to 37 percent increase; revenue for Work
is still expected to increase between 19 and 21 percent.
- International revenue is expected to increase between 22
percent and 24 percent. By geographic region, in the EMEA region,
revenue is expected to increase between 28 percent and 30 percent.
In the Asia Pacific region, revenue is expected to increase between
7 percent and 9 percent. And, in the Americas (non-U.S.) region,
revenue is expected to increase between 33 percent and 35
percent.
- Direct-to-consumer revenue is now expected to increase
between 32 percent and 34 percent versus the previous expectation
of 34 percent and 36 percent, including Digital revenue
growth of greater than 15 percent versus the previous expectation
of about 20 percent.
- Adjusted gross margin is expected to be at least 55.0
percent, which represents an estimated increase of at least 170
basis points.
- Adjusted operating margin is expected to increase at
least 500 basis points to at least 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 be
approximately $1.0 billion.
- Other full year assumptions include an effective tax
rate of approximately 14 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 March 21, 2022, to shareholders of record on
March 10, 2022. 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.
Supplemental Information
VF has made available supplemental investor information related
to historical quarterly and annual revenues for the top 4 brands
for fiscal 2020 and fiscal 2021. The information provided is in
accordance with U.S. generally accepted accounting principles
(“GAAP”). VF believes this provides investors with useful
supplemental financial information regarding VF’s underlying
business trends and the performance of VF’s consolidated
operations. The supplemental financial information is accessible at
ir.vfc.com.
Webcast Information
VF will host its third 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 third 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
December
Nine Months Ended
December
2021
2020
2021
2020
Net revenues
$ 3,624,384
$ 2,971,541
$ 9,017,176
$ 6,656,158
Costs and operating expenses
Cost of goods sold
1,592,604
1,345,024
4,027,601
3,134,381
Selling, general and administrative
expenses
1,353,338
1,214,518
3,549,763
3,036,639
Total costs and operating expenses
2,945,942
2,559,542
7,577,364
6,171,020
Operating income
678,442
411,999
1,439,812
485,138
Interest, net
(33,388
)
(31,776
)
(100,533
)
(90,656
)
Loss on debt extinguishment
(3,645
)
—
(3,645
)
—
Other income (expense), net
(95
)
6,484
16,495
(27,059
)
Income from continuing operations
before income taxes
641,314
386,707
1,352,129
367,423
Income tax expense
123,513
59,048
216,303
74,260
Income from continuing
operations
517,801
327,659
1,135,826
293,163
Income from discontinued operations,
net of tax
—
19,581
170,273
25,186
Net income
$ 517,801
$ 347,240
$ 1,306,099
$ 318,349
Earnings per common share - basic
(a)
Continuing operations
$ 1.33
$ 0.84
$ 2.90
$ 0.75
Discontinued operations
—
0.05
0.44
0.06
Total earnings per common share -
basic
$ 1.33
$ 0.89
$ 3.34
$ 0.82
Earnings per common share - diluted
(a)
Continuing operations
$ 1.32
$ 0.83
$ 2.89
$ 0.75
Discontinued operations
—
0.05
0.43
0.06
Total earnings per common share -
diluted
$ 1.32
$ 0.88
$ 3.32
$ 0.81
Weighted average shares
outstanding
Basic
390,430
389,872
391,187
389,262
Diluted
392,495
392,851
393,547
391,607
Cash dividends per common share
$ 0.50
$ 0.49
$ 1.48
$ 1.45
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 December 2021 relate to the 13-week and
39-week fiscal periods ended January 1, 2022 and all references to
periods ended December 2020 relate to the 13-week and 39-week
fiscal periods ended December 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)
December
March
December
2021
2021
2020
ASSETS
Current assets
Cash and equivalents
$ 1,333,839
$ 815,750
$ 3,254,236
Accounts receivable, net
1,495,859
1,298,020
1,411,565
Inventories
1,287,210
1,061,839
1,075,983
Short-term investments
—
598,806
599,403
Other current assets
483,738
423,877
383,384
Current assets of discontinued
operations
—
587,578
560,648
Total current assets
4,600,646
4,785,870
7,285,219
Property, plant and equipment,
net
1,049,691
975,876
955,845
Goodwill and intangible assets,
net
5,419,777
5,454,972
3,056,254
Operating lease right-of-use
assets
1,302,545
1,474,434
1,476,503
Other assets
1,163,663
1,062,877
970,520
Total assets
$ 13,536,322
$ 13,754,029
$ 13,744,341
LIABILITIES AND STOCKHOLDERS'
EQUITY
Current liabilities
Short-term borrowings
$ 106,010
$ 11,061
$ 299,748
Current portion of long-term debt
500,915
1,023
1,006
Accounts payable
559,716
463,208
412,324
Accrued liabilities
2,057,237
1,609,928
1,664,760
Current liabilities of discontinued
operations
—
125,257
120,185
Total current liabilities
3,223,878
2,210,477
2,498,023
Long-term debt
4,646,379
5,709,149
5,786,552
Operating lease liabilities
1,093,013
1,236,461
1,211,655
Other liabilities
919,652
1,541,778
1,109,937
Total liabilities
9,882,922
10,697,865
10,606,167
Stockholders' equity
3,653,400
3,056,164
3,138,174
Total liabilities and stockholders'
equity
$ 13,536,322
$ 13,754,029
$ 13,744,341
VF CORPORATION
Condensed Consolidated
Statements of Cash Flows
(Unaudited)
(In thousands)
Nine Months Ended
December
2021
2020
Operating activities
Net income
$ 1,306,099
$ 318,349
Income from discontinued operations, net
of tax
170,273
25,186
Income from continuing operations, net of
tax
1,135,826
293,163
Depreciation and amortization
199,652
204,580
Reduction in the carrying amount of
right-of-use assets
309,588
309,579
Other adjustments
(853,776
)
276,955
Cash provided by operating activities -
continuing operations
791,290
1,084,277
Cash provided by operating activities -
discontinued operations
6,090
57,779
Cash provided by operating activities
797,380
1,142,056
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 and maturities of
short-term investments
598,806
200,000
Capital expenditures
(214,220
)
(152,446
)
Software purchases
(63,758
)
(51,964
)
Other, net
12,819
(9,116
)
Cash provided (used) by investing
activities - continuing operations
953,936
(813,526
)
Cash used by investing activities -
discontinued operations
(525
)
(3,171
)
Cash provided (used) by investing
activities
953,411
(816,697
)
Financing activities
Net increase (decrease) from short-term
borrowings and long-term debt
(411,400
)
2,044,426
Share repurchases
(299,999
)
—
Cash dividends paid
(579,194
)
(564,904
)
Proceeds from issuance of Common Stock,
net of payments for tax withholdings
32,929
45,867
Cash provided (used) by financing
activities
(1,257,664
)
1,525,389
Effect of foreign currency rate changes
on cash, cash equivalents and restricted cash
(9,339
)
12,513
Net change in cash, cash equivalents
and restricted cash
483,788
1,863,261
Cash, cash equivalents and restricted
cash – beginning of year
851,205
1,411,322
Cash, cash equivalents and restricted
cash – end of period
$ 1,334,993
$ 3,274,583
VF CORPORATION
Supplemental Financial
Information
Reportable Segment
Information
(Unaudited)
(In thousands)
Three Months Ended
December
% Change
% Change Constant Currency
(a)
% Change Organic (b)
% Change Constant Currency and
Organic (a) (b)
2021
2020
Segment revenues
Outdoor
$ 1,928,427
$ 1,571,043
23
%
23
%
23
%
23
%
Active
1,410,577
1,127,121
25
%
26
%
8
%
8
%
Work
285,101
270,182
6
%
5
%
6
%
5
%
Other (c)
279
3,195
*
*
*
*
Total segment revenues
$ 3,624,384
$ 2,971,541
22
%
22
%
15
%
16
%
Segment profit (loss)
Outdoor
$ 450,432
$ 311,767
Active
254,497
201,373
Work
47,672
16,900
Other (c)
(44
)
(4,435
)
Total segment profit
752,557
525,605
Corporate and other expenses
(74,210
)
(107,122
)
Interest, net
(33,388
)
(31,776
)
Loss on debt extinguishment
(3,645
)
—
Income from continuing operations
before income taxes
$ 641,314
$ 386,707
(a) Refer to constant currency definition
on the following pages.
(b) Excludes acquisition representing the
operating results of Supreme for the three months ended December
2021. Refer to Non-GAAP financial information on "Reconciliation of
Select GAAP Measures to Non-GAAP Measures - Three and Nine Months
Ended December 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)
Nine Months Ended
December
% Change
% Change Constant Currency
(a)
% Change Organic (b)
% Change Constant Currency and
Organic (a) (b)
2021
2020
Segment revenues
Outdoor
$ 4,052,802
$ 3,066,678
32
%
30
%
32
%
30
%
Active
4,104,818
2,898,639
42
%
39
%
26
%
24
%
Work
858,999
686,163
25
%
24
%
25
%
24
%
Other (c)
557
4,678
*
*
*
*
Total segment revenues
$ 9,017,176
$ 6,656,158
35
%
34
%
29
%
27
%
Segment profit (loss)
Outdoor
$ 662,761
$ 283,531
Active
809,708
467,632
Work
150,649
13,672
Other (c)
(696
)
(9,322
)
Total segment profit
1,622,422
755,513
Corporate and other expenses
(166,115
)
(297,434
)
Interest, net
(100,533
)
(90,656
)
Loss on debt extinguishment
(3,645
)
—
Income (loss) from continuing
operations before income taxes
$ 1,352,129
$ 367,423
(a) Refer to constant currency definition
on the following pages.
(b) Excludes acquisition representing the
operating results of Supreme for the nine months ended December
2021. Refer to Non-GAAP financial information on "Reconciliation of
Select GAAP Measures to Non-GAAP Measures - Three and Nine Months
Ended December 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 December
2021
As Reported
Adjust for Foreign
under GAAP
Currency Exchange
Constant Currency
Segment revenues
Outdoor
$ 1,928,427
$ 733
$ 1,929,160
Active
1,410,577
4,027
1,414,604
Work
285,101
(693
)
284,408
Other
279
—
279
Total segment revenues
$ 3,624,384
$ 4,067
$ 3,628,451
Segment profit (loss)
Outdoor
$ 450,432
$ (2,776
)
$ 447,656
Active
254,497
1,362
255,859
Work
47,672
(125
)
47,547
Other
(44
)
2
(42
)
Total segment profit
752,557
(1,537
)
751,020
Corporate and other expenses
(74,210
)
54
(74,156
)
Interest, net
(33,388
)
—
(33,388
)
Loss on debt extinguishment
(3,645
)
—
(3,645
)
Income from continuing operations
before income taxes
$ 641,314
$ (1,483
)
$ 639,831
Diluted earnings per share
growth
58
%
0
%
58
%
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)
Nine Months Ended December
2021
As Reported
Adjust for Foreign
under GAAP
Currency Exchange
Constant Currency
Segment revenues
Outdoor
$ 4,052,802
$ (54,215
)
$ 3,998,587
Active
4,104,818
(62,929
)
4,041,889
Work
858,999
(9,446
)
849,553
Other
557
—
557
Total segment revenues
$ 9,017,176
$ (126,590
)
$ 8,890,586
Segment profit (loss)
Outdoor
$ 662,761
$ (7,860
)
$ 654,901
Active
809,708
(13,352
)
796,356
Work
150,649
(2,194
)
148,455
Other
(696
)
(53
)
(749
)
Total segment profit
1,622,422
(23,459
)
1,598,963
Corporate and other expenses
(166,115
)
1,171
(164,944
)
Interest, net
(100,533
)
—
(100,533
)
Loss on debt extinguishment
(3,645
)
—
(3,645
)
Income from continuing operations
before income taxes
$ 1,352,129
$ (22,288
)
$ 1,329,841
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 Nine Months Ended
December 2021
(Unaudited)
(In thousands, except per
share amounts)
Three Months Ended December 2021
As Reported
under GAAP
Transaction and Deal Related
Activities (a)
Specified Strategic Business
Decisions (b)
Tax Items (c)
Adjusted
Contribution from Acquisition
(d)
Adjusted Organic
Revenues
$ 3,624,384
$ —
$ —
$ —
$ 3,624,384
$ (193,177
)
$ 3,431,207
Gross profit
2,031,780
—
9,875
—
2,041,655
(115,794
)
1,925,861
Percent
56.1
%
56.3
%
56.1
%
Operating income
678,442
(49,398
)
13,809
—
642,853
(54,174
)
588,679
Percent
18.7
%
17.7
%
17.2
%
Diluted earnings per share from
continuing operations (e)
1.32
(0.13
)
0.03
0.13
1.35
(0.11
)
1.24
Nine Months Ended December 2021
As Reported
under GAAP
Transaction and Deal Related
Activities (a)
Specified Strategic Business
Decisions (b)
Tax Items (c)
Adjusted
Contribution from Acquisition
(d)
Adjusted Organic
Revenues
$ 9,017,176
$ —
$ —
$ —
$ 9,017,176
$ (438,482
)
$ 8,578,694
Gross profit
4,989,575
—
21,944
—
5,011,519
(263,988
)
4,747,531
Percent
55.3
%
55.6
%
55.3
%
Operating income
1,439,812
(151,880
)
37,671
—
1,325,603
(93,847
)
1,231,756
Percent
16.0
%
14.7
%
14.4
%
Diluted earnings per share from
continuing operations (e)
2.89
(0.37
)
0.08
0.13
2.72
(0.19
)
2.53
(a) Transaction and deal related
activities include activities associated with the acquisition of
Supreme Holdings, Inc. ("Supreme") for the three and nine months
ended December 2021. Transaction and deal related activities
include a decrease in the estimated fair value of the contingent
consideration liability of $50.0 million and $158.0 million for the
three and nine months ended December 2021, respectively, and
integration costs of $0.6 million and $6.1 million for the three
and nine months ended December 2021, respectively. The transaction
and deal related activities resulted in a net tax benefit of $3.2
million and net tax expense of $5.1 million in the three and nine
months ended December 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 nine months ended December 2021 include costs
related to VF's business model transformation of $0.5 million and
$2.2 million in the three and nine months ended December 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 $13.7 million and $35.5 million in the three and nine
months ended December 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 $0.4 million during the three months ended
December 2021. The specified strategic business decisions also
include non-operating expense of $0.2 million and income of $1.5
million during the three and nine months ended December 2021,
respectively, associated with VF's transformation initiatives. The
specified strategic business decisions resulted in a net tax
benefit of $2.0 million and $5.2 million in the three and nine
months ended December 2021, respectively.
(c) Tax items include $51.9 million net
tax expense associated with certain discrete tax activities
recognized during the three and nine months ended December 2021.
This is comprised of $87.1 million tax expense for unrecognized tax
benefits resulting from updated estimates related to intellectual
property transfers completed in a prior period, and $35.2 million
tax benefit related to the reorganization of certain foreign
operations.
(d) The contribution from acquisition
represents the operating results of Supreme for the three and nine
months ended December 2021. The results exclude transaction and
deal related activities.
(e) Amounts shown in the table have been
calculated using unrounded numbers. The diluted earnings per share
impacts were calculated using 392,495,000 and 393,547,000 weighted
average common shares for the three and nine months ended December
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, activity related
to specified strategic business decisions and certain tax items,
and on an adjusted organic basis, which excludes the operating
results of Supreme (for the three and nine months ended December
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 Nine Months Ended
December 2020
(Unaudited)
(In thousands, except per
share amounts)
Three Months Ended December
2020
As Reported
under GAAP
Transaction and Deal Related
Costs (a)
Specified Strategic Business
Decisions (b)
Adjusted
Revenues
$ 2,971,541
$ —
$ —
$ 2,971,541
Gross profit
1,626,517
—
27,936
1,654,453
Percent
54.7
%
55.7
%
Operating income
411,999
6,680
39,378
458,057
Percent
13.9
%
15.4
%
Diluted earnings per share from
continuing operations (c)
0.83
0.01
0.09
0.93
Nine Months Ended December 2020
As Reported
under GAAP
Transaction and Deal Related
Costs(a)
Specified Strategic Business
Decisions (b)
Adjusted
Revenues
$ 6,656,158
$ —
$ —
$ 6,656,158
Gross profit
3,521,777
410
42,599
3,564,786
Percent
52.9
%
53.6
%
Operating income
485,138
7,132
76,863
569,133
Percent
7.3
%
8.6
%
Diluted earnings per share from
continuing operations (c)
0.75
0.01
0.27
1.04
(a) Transaction and deal related costs
include expenses associated with the acquisition of Supreme
Holdings, Inc. of $6.6 million for both the three and nine months
ended December 2020. Transaction and deal related costs also
include expenses associated with the anticipated sale of the
Occupational Workwear business of $0.1 million and $0.5 million,
that did not meet the criteria for discontinued operations, for the
three and nine months ended December 2020, respectively. The
transaction and deal related costs resulted in a net tax benefit of
$1.7 million in both the three and nine months ended December
2020.
(b) Specified strategic business decisions
for the three and nine months ended December 2020 include costs
related to a transformation initiative for our Asia-Pacific
regional operations of $20.3 million in both periods. Specified
strategic business decisions also include cost optimization
activities and other charges indirectly related to the strategic
review of the Occupational Workwear business, which totaled $19.1
million and $52.3 million during the three and nine months ended
December 2020, respectively. The costs also include 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, which totaled $4.0
million for the nine months ended December 2020. The nine months
ended December 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 strategic
business decisions resulted in a net tax benefit of $5.7 million
and $11.7 million in the three and nine months ended December 2020,
respectively.
(c) Amounts shown in the table have been
calculated using unrounded numbers. The diluted earnings per share
impacts were calculated using 392,851,000 and 391,607,000 weighted
average common shares for the three and nine months ended December
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 December
2021
Nine Months Ended December
2021
Top 4 Brand Revenue Growth
Americas
EMEA
APAC
Global
Americas
EMEA
APAC
Global
Vans®
% change
11
%
22
%
(17
)%
8
%
33
%
38
%
2
%
28
%
% change constant currency*
11
%
24
%
(18
)%
8
%
32
%
34
%
(3
)%
26
%
The North Face®
% change
21
%
40
%
29
%
28
%
28
%
52
%
30
%
36
%
% change constant currency*
20
%
41
%
25
%
27
%
27
%
49
%
24
%
34
%
Timberland®
% change
16
%
14
%
(11
)%
11
%
40
%
19
%
(6
)%
25
%
% change constant currency*
16
%
17
%
(12
)%
11
%
39
%
18
%
(9
)%
23
%
Dickies®
% change
30
%
(40
)%
(28
)%
4
%
46
%
(22
)%
(7
)%
24
%
% change constant currency*
30
%
(40
)%
(29
)%
4
%
46
%
(24
)%
(11
)%
23
%
*Refer to constant currency definition on
previous pages.
VF CORPORATION
Supplemental Financial
Information
Geographic and Channel Revenue
Information
(Unaudited)
Three Months Ended December
2021
% Change
% Change Constant
Currency*
% Change Organic (a)
% Change Constant Currency and
Organic*(a)
Geographic
Revenue Growth
U.S.
24
%
24
%
17
%
17
%
EMEA
26
%
28
%
23
%
25
%
APAC
5
%
3
%
(5
)%
(7
)%
Greater China
(6
)%
(9
)%
(6
)%
(9
)%
Americas (non-U.S.)
27
%
24
%
27
%
24
%
International
19
%
20
%
14
%
14
%
Global
22
%
22
%
15
%
16
%
Nine Months Ended December
2021
% Change
% Change Constant
Currency*
% Change Organic (a)
% Change Constant Currency and
Organic*(a)
Geographic
Revenue Growth
U.S.
41
%
41
%
33
%
33
%
EMEA
36
%
33
%
32
%
30
%
APAC
14
%
10
%
5
%
0
%
Greater China
5
%
(1
)%
5
%
(1
)%
Americas (non-U.S.)
45
%
37
%
45
%
37
%
International
30
%
26
%
24
%
21
%
Global
35
%
34
%
29
%
27
%
Three Months Ended December
2021
% Change
% Change Constant
Currency*
% Change Organic (a)
% Change Constant Currency and
Organic*(a)
Channel Revenue
Growth
Wholesale (b)
14
%
14
%
13
%
13
%
Direct-to-consumer
30
%
30
%
17
%
18
%
Digital
21
%
21
%
3
%
3
%
Nine Months Ended December
2021
% Change
% Change Constant
Currency*
% Change Organic (a)
% Change Constant Currency and
Organic*(a)
Channel Revenue
Growth
Wholesale (b)
29
%
27
%
29
%
27
%
Direct-to-consumer
43
%
41
%
28
%
27
%
Digital
23
%
21
%
2
%
0
%
As of December
2021
2020
DTC Store
Count
Total
1,354
1,396
*Refer to constant currency definition on
previous pages.
(a) Excludes acquisition representing the
operating results of Supreme for the three and nine months ended
December 2021. Refer to Non-GAAP financial information on
"Reconciliation of Select GAAP Measures to Non-GAAP Measures -
Three and Nine Months Ended December 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/20220128005025/en/
VF Corporation Allegra
Perry, 720-501-3524 Vice President, Investor Relations or Craig
Hodges, 720-778-4116 Vice President, Corporate Affairs
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