VF Corporation (NYSE: VFC) today announced financial results for
its fourth quarter (Q4'FY22) and fiscal year ended April 2, 2022
(FY22).
Q4'FY22 Financial Highlights
- Revenue $2.8 billion, up 9% (up 12% in constant dollars)
- The North Face® revenue $0.8 billion, up 24% (up 26% in
constant dollars)
- Vans® revenue $1.0 billion, flat (up 2% in constant
dollars)
- Gross margin 51.9%, down 20 basis points; Adjusted gross margin
52.2%, down 50 basis points
- Operating margin 6.8%, up 210 basis points; Adjusted operating
margin 7.9%, up 120 basis points
- Earnings per share (EPS) $0.21, up 32%; Adjusted EPS $0.45, up
67%
- Return of $244 million to shareholders through $194 million in
cash dividends, $50 million of shares repurchased
FY22 Financial Highlights
- Revenue $11.8 billion, up 28% (up 27% in constant dollars);
excluding acquisitions, up 23%
- Gross margin 54.5%, up 180 basis points; Adjusted gross margin
54.8%, up 150 basis points, including a 20 basis point positive
impact from acquisitions
- Operating margin 13.8%, up 720 basis points; Adjusted operating
margin 13.1%, up 510 basis points, including a 30 basis point
positive impact from acquisitions
- EPS $3.10, up 242%; Adjusted EPS up 143% to $3.18, including a
$0.19 per share contribution from acquisitions
- Return of $1.1 billion to shareholders through $773 million in
cash dividends, $350 million of shares repurchased
FY23 Financial Outlook
- VF provides the following outlook for full year fiscal 2023,
which is based on these assumptions:
- No additional significant COVID-19 related lockdowns in any key
commercial or production regions, with the current restrictions in
China expected to ease from the beginning of June 2022
- No significant worsening in global inflation rates and consumer
sentiment
- Total VF revenue up at least 7% in constant dollars
- The North Face® revenue up low double digit percent; Vans®
revenue up mid-single digit percent
- Gross margin up approximately 50 basis points
- Operating margin approximately 13.6%
- Tax rate approximately 16%, returning to a more normalized
rate
- EPS $3.30 to $3.40
- Adjusted cash flow from operations approximately $1.2 billion;
Capital expenditures approximately $250 million
- Excludes the impact of a payment VF anticipates making to the
Internal Revenue Service in fiscal 2023 of approximately $845
million plus accrued interest relating to the dispute regarding the
timing of income inclusion associated with VF's acquisition of
Timberland in 2011, as discussed in more detail below
Steve Rendle, Chairman, President and CEO of VF, said: "I
am pleased with the progress we have made advancing our strategic
priorities while successfully navigating another eventful year. We
largely delivered on the commitments we made at the outset of
Fiscal 2022 by achieving broad-based growth across our family of
brands. A portion of our active segment did not achieve its
potential. We understand the issues, we have the right people in
place and we know we will do better.
"Our performance is testament to the incredible breadth and
depth of talent across our organization and our teams continue to
be highly resourceful, committed and passionate.
"We will continue to thoughtfully invest in our brands and
value-enhancing strategic growth opportunities and I am confident
VF has a long runway for sustained, profitable and broad-based
growth ahead.”
Summary Revenue
Information
(Unaudited)
Three Months Ended
March
Twelve Months Ended
March
(Dollars in millions)
2022
2021
% Change
% Change (constant currency)
2022
2021
% Change
% Change (constant currency)
Brand:
Vans®
$
991.2
$
990.5
0
%
2
%
$
4,161.9
$
3,465.7
20
%
19
%
The North Face®
769.5
621.0
24
%
26
%
3,259.7
2,457.4
33
%
32
%
Timberland®
434.9
398.8
9
%
12
%
1,823.1
1,513.0
20
%
20
%
Dickies®
197.0
184.5
7
%
8
%
837.7
701.5
19
%
19
%
Other Brands
432.1
387.9
11
%
15
%
1,759.4
1,101.2
60
%
60
%
VF Revenue
$
2,824.7
$
2,582.7
9
%
12
%
$
11,841.8
$
9,238.8
28
%
27
%
Region:
U.S.
$
1,418.6
$
1,264.9
12
%
12
%
$
6,178.3
$
4,635.7
33
%
33
%
EMEA
883.4
767.6
15
%
22
%
3,399.3
2,617.9
30
%
30
%
APAC
377.7
426.4
(11
)%
(10
)%
1,637.2
1,528.4
7
%
4
%
Americas (non-U.S.)
144.9
123.8
17
%
18
%
627.0
456.8
37
%
32
%
International
1,406.0
1,317.8
7
%
11
%
5,663.5
4,603.1
23
%
22
%
VF Revenue
$
2,824.7
$
2,582.7
9
%
12
%
$
11,841.8
$
9,238.8
28
%
27
%
Channel:
DTC
$
1,156.8
$
1,144.4
1
%
3
%
$
5,404.1
$
4,113.6
31
%
31
%
Wholesale (a)
1,667.9
1,438.2
16
%
19
%
6,437.8
5,125.2
26
%
25
%
VF Revenue
$
2,824.7
$
2,582.7
9
%
12
%
$
11,841.8
$
9,238.8
28
%
27
%
All references to periods ended March 2022 relate to the 13-week
and 52-week fiscal periods ended April 2, 2022 and all references
to periods ended March 2021 relate to the 14-week and 53-week
fiscal periods ended April 3, 2021. Note: Amounts may not sum due
to rounding
(a) Royalty revenues are included in the
wholesale channel for all periods.
All per share amounts are presented on a diluted basis. This
release refers to “reported” and “constant dollar” amounts, terms
that are described under the heading below “Constant Currency -
Excluding the Impact of Foreign Currency.” Unless otherwise noted,
“reported” and “constant dollar” amounts are the same. This release
also refers to “continuing” and “discontinued” operations amounts,
which are concepts described under the heading below “Discontinued
Operations - Occupational Workwear Business.” Unless otherwise
noted, results presented are based on continuing operations. This
release also refers to “adjusted” amounts, a term that is described
under the heading below “Adjusted Amounts - Excluding Transaction
and Deal Related Activities, Costs Related to Specified Strategic
Business Decisions and 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
through the one-year anniversary of the acquisition.
Fourth Quarter Fiscal 2022 Income Statement Review
- Revenue increased 9% (up 12% in constant dollars) to
$2.8 billion driven by increases in the EMEA and North America
regions partially offset by a decline in the APAC region primarily
due to COVID lockdowns. The fourth quarter of fiscal 2021 also
included an extra week when compared to the fiscal 2022 period due
to VF's 53-week fiscal 2021.
- Gross margin decreased 20 basis points to 51.9%,
primarily driven by incremental freight costs. On an adjusted
basis, gross margin decreased 50 basis points to 52.2%.
- Operating income on a reported basis was $192 million.
On an adjusted basis, operating income increased 30% (36% in
constant dollars) to $224 million. Operating margin on a
reported basis was 6.8%. Adjusted operating margin increased 120
basis points to 7.9%.
- Earnings per share was $0.21 on a reported basis. On an
adjusted basis, earnings per share increased 67% (up 76% in
constant dollars) to $0.45.
Full Year Fiscal 2022 Income Statement Review
- Revenue increased 28% (up 27% in constant dollars) to
$11.8 billion. Excluding the impact of acquisitions, revenue
increased 23%, driven by increases in our largest brands and
regions. Fiscal 2021 also included an extra week when compared to
the fiscal 2022 period due to VF's 53-week fiscal 2021.
- Gross margin increased 180 basis points to 54.5%,
primarily driven by a higher proportion of full price sales more
than offsetting incremental freight costs. On an adjusted basis,
gross margin increased 150 basis points, including a 20 basis point
positive impact from acquisitions, to 54.8%.
- Operating income on a reported basis was $1.6 billion.
On an adjusted basis, operating income increased 109% (up 107% in
constant dollars) to $1.5 billion, including a $94 million
contribution from acquisitions. Operating margin on a
reported basis was 13.8%. Adjusted operating margin increased 510
basis points, including a 30 basis point positive impact from
acquisitions, to 13.1%.
- Earnings per share was $3.10 on a reported basis. On an
adjusted basis, earnings per share increased 143% (up 142% in
constant dollars) to $3.18, including a $0.19 contribution from
acquisitions.
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 zero tolerance policy in China in response to COVID-19 is
impacting some specific raw material suppliers within the country.
The majority of VF's supply chain is currently operational.
Suppliers are complying with local public health advisories and
governmental restrictions. Most final product manufacturing and
assembly suppliers are back to normal operating levels. 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 strategically as needed. VF's distribution
centers are operational in accordance with local government
guidelines while maintaining enhanced health and safety
protocols.
In North America, no stores were closed during the fourth
quarter. Currently, all stores are open.
In the EMEA region, 6% of stores were closed at the beginning of
the fourth quarter and at the end of the fourth quarter and
currently no stores are closed due to COVID-19.
In the APAC region, including Mainland China, no stores were
closed at the beginning of the fourth quarter. 12% of stores were
closed at the end of the fourth quarter. Currently, 19% 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.
Balance Sheet Highlights
Inventories were up 34% compared with the same period last year.
VF returned approximately $194 million of cash to shareholders
through dividends during the quarter. The company also repurchased
approximately $50 million of shares during the quarter and has $2.5
billion remaining under its current share repurchase
authorization.
Dividend Declared
VF’s Board of Directors declared a quarterly dividend of $0.50
per share, payable on June 21, 2022, to shareholders of record on
June 10, 2022. Subject to approval by its Board of Directors, VF
intends to continue to pay its regularly scheduled cash
dividend.
Update on Tax Dispute in Connection with Timberland
Acquisition
As previously reported, VF petitioned the U.S. Tax Court (the
Court) to resolve an Internal Revenue Service (IRS) dispute
regarding the timing of income inclusion associated with VF’s
acquisition of The Timberland Company in September 2011. While the
IRS argues that all such income should have been immediately
included in 2011, VF has reported periodic income inclusions in
subsequent tax years. Both parties moved for summary judgment on
the issue, and on January 31, 2022, the Court issued its opinion in
favor of the IRS. VF believes the opinion of the Court was in error
based on the technical merits and intends to appeal; however, VF
will be required to pay the 2011 taxes and interest being disputed
or post a surety bond. It is anticipated that during fiscal 2023,
the IRS will assess, and VF will pay, the 2011 taxes and interest,
which would be recorded as a tax receivable based on VF's expected
probability of a successful appeal. The gross amount of taxes and
interest as of April 2, 2022 was estimated at approximately $845
million and will continue to accrue interest until paid. VF
continues to remain confident in its timing and treatment of the
income inclusion and VF is vigorously defending its position.
However, should the Court opinion ultimately be upheld on appeal,
this tax receivable may not be collected by VF. If the Court
opinion is upheld, VF should be entitled to a refund of taxes paid
on the periodic inclusions that VF has reported. However, any such
refund could be substantially reduced by potential indirect tax
effects resulting from application of the Court opinion. Deferred
tax liabilities, representing VF’s future tax on annual inclusions,
would also be released. The net impact to tax expense estimated as
of April 2, 2022 could be up to $700 million.
Webcast Information
VF will host its fourth quarter fiscal 2022 conference call
beginning at 4:30 p.m. Eastern Time today. The conference call will
be broadcast live via the Internet, accessible at ir.vfc.com. For
those unable to listen to the live broadcast, an archived version
will be available at the same location.
Presentation
A presentation on fourth quarter fiscal 2022 results will be
available at ir.vfc.com today before the conference call and will
be archived at the same location.
About VF
Founded in 1899, VF Corporation is one of the world’s largest
apparel, footwear and accessories companies connecting people to
the lifestyles, activities and experiences they cherish most
through a family of iconic outdoor, active and workwear brands
including Vans®, The North Face®, Timberland® and Dickies®. Our
purpose is to power movements of sustainable and active lifestyles
for the betterment of people and our planet. We connect this
purpose with a relentless drive to succeed to create value for all
stakeholders and use our company as a force for good. For more
information, please visit vfc.com.
Constant Currency - Excluding the Impact of Foreign
Currency
This release refers to “reported” amounts in accordance with
U.S. generally accepted accounting principles (“GAAP”), which
include translation and transactional impacts from foreign currency
exchange rates. This release also refers to “constant dollar”
amounts, which exclude the impact of translating foreign currencies
into U.S. dollars. Reconciliations of GAAP measures to constant
currency amounts are presented in the supplemental financial
information included with this release, which identifies and
quantifies all excluded items, and provides management’s view of
why this information is useful to investors.
Discontinued Operations - Occupational Workwear
Business
On June 28, 2021, VF completed the sale of its Occupational
Workwear business. The Occupational Workwear business was comprised
primarily of the following brands and businesses: Red Kap®, VF
Solutions®, Bulwark®, Workrite®, Walls®, Terra®, Kodiak®, Work
Authority® and Horace Small®. The business also included a license
for certain Dickies® occupational workwear products that were
historically sold through the business-to-business channel.
Accordingly, the company has reported the 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 an increase in the estimated fair value of the contingent
consideration liability of $8 million in the fourth quarter of
fiscal 2022 and a decrease of $150 million in fiscal 2022, and
integration costs of approximately $1 million in the fourth quarter
of fiscal 2022 and $7 million in 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 specific charges related
to certain assets impacted by the conflict in Ukraine. Total costs
were approximately $23 million in the fourth quarter of fiscal 2022
and $60 million in fiscal 2022.
The adjusted amounts in this release exclude approximately $67
million and $119 million net tax expense associated with certain
discrete tax adjustments recognized during the fourth quarter of
fiscal 2022 and during fiscal 2022, respectively.
Combined, the above items negatively impacted earnings per share
by $0.24 during the fourth quarter of fiscal 2022 and $0.08 during
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. The company also
provides guidance on a non-GAAP basis as we cannot predict certain
elements which are included in reported GAAP results, including the
impact of foreign currency and other strategic initiatives.
Additionally, the impact of the anticipated payment of taxes and
interest related to the dispute with the IRS regarding the
Timberland acquisition in 2011 described above has been excluded
from fiscal 2023 adjusted cash flow from operations.
Forward-looking Statements
Certain statements included in this release are "forward-looking
statements" within the meaning of the federal securities laws.
Forward-looking statements are made based on our expectations and
beliefs concerning future events impacting VF and therefore involve
several risks and uncertainties. You can identify these statements
by the fact that they use words such as “will,” “anticipate,”
“estimate,” “expect,” “should,” and “may” and other words and terms
of similar meaning or use of future dates; however, the absence of
these words or similar expressions does not mean that a statement
is not forward-looking. All statements regarding VF’s plans,
objectives, projections and expectations relating to VF’s
operations or financial performance, and assumptions related
thereto are forward-looking statements. We caution that
forward-looking statements are not guarantees and that actual
results could differ materially from those expressed or implied in
the forward-looking statements. VF undertakes no obligation to
publicly update or revise any forward-looking statements, whether
as a result of new information, future events or otherwise, except
as required by law. Potential risks and uncertainties that could
cause the actual results of operations or financial condition of VF
to differ materially from those expressed or implied by
forward-looking statements include, but are not limited to: risks
arising from the widespread outbreak of an illness or any other
communicable disease, or any other public health crisis, including
the coronavirus (COVID-19) global pandemic; the level of consumer
demand for apparel, footwear and accessories; disruption to VF’s
distribution system; changes in global economic conditions and the
financial strength of VF’s customers, including as a result of
current inflationary pressures; fluctuations in the price,
availability and quality of raw materials and contracted products;
disruption and volatility in the global capital and credit markets;
VF’s response to changing fashion trends, evolving consumer
preferences and changing patterns of consumer behavior; intense
competition from online retailers and other direct-to-consumer
business risks; third-party manufacturing and product innovation;
increasing pressure on margins; VF’s ability to implement its
business strategy; VF’s ability to grow its international,
direct-to-consumer and digital businesses; VF’s ability to
transform its model to be more consumer-minded, retail-centric and
hyper-digital; retail industry changes and challenges; VF’s ability
to create and maintain an agile and efficient operating model and
organizational structure; VF’s and its vendors’ ability to maintain
the strength and security of information technology systems; the
risk that VF’s facilities and systems and those of our third-party
service providers may be vulnerable to and unable to anticipate or
detect data or information security breaches and data or financial
loss; VF’s ability to properly collect, use, manage and secure
business, consumer and employee data and comply with privacy and
security regulations; foreign currency fluctuations; stability of
VF’s vendors’ manufacturing facilities and VF’s ability to
establish and maintain effective supply chain capabilities;
continued use by VF’s suppliers of ethical business practices; VF’s
ability to accurately forecast demand for products; continuity of
members of VF’s management; VF’s ability to recruit, develop or
retain qualified employees; VF’s ability to protect trademarks and
other intellectual property rights; possible goodwill and other
asset impairment; maintenance by VF’s licensees and distributors of
the value of VF’s brands; VF’s ability to execute acquisitions and
dispositions and integrate acquisitions; business resiliency in
response to natural or man-made economic, political or
environmental disruptions; changes in tax laws and additional tax
liabilities, including for the timing of income inclusion
associated with our acquisition of the Timberland® brand in 2011;
legal, regulatory, political, economic, and geopolitical risks,
including those related to the current conflict in Ukraine; changes
to laws and regulations; adverse or unexpected weather conditions;
VF's indebtedness and its ability to obtain financing on favorable
terms, if needed, could prevent VF from fulfilling its financial
obligations; climate change and increased focus on environmental,
social and governance issues; and tax risks associated with the
spin-off of our Jeanswear business completed in 2019. More
information on potential factors that could affect VF’s financial
results is included from time to time in VF’s public reports filed
with the SEC, including VF’s Annual Report on Form 10-K, and
Quarterly Reports on Form 10-Q, and Forms 8-K filed or furnished
with the SEC.
VF CORPORATION
Condensed Consolidated
Statements of Operations
(Unaudited)
(In thousands, except per
share amounts)
Three Months Ended
March
Twelve Months Ended
March
2022
2021
2022
2021
Net revenues
$
2,824,664
$
2,582,672
$
11,841,840
$
9,238,830
Costs and operating expenses
Cost of goods sold
1,358,792
1,236,399
5,386,393
4,370,780
Selling, general and administrative
expenses
1,273,480
1,211,250
4,823,243
4,240,058
Impairment of intangible assets
—
12,530
—
20,361
Total costs and operating expenses
2,632,272
2,460,179
10,209,636
8,631,199
Operating income
192,392
122,493
1,632,204
607,631
Interest, net
(30,930
)
(35,844
)
(131,463
)
(126,500
)
Loss on debt extinguishment
—
—
(3,645
)
—
Other income (expense), net
9,659
2,400
26,154
(24,659
)
Income from continuing operations
before income taxes
171,121
89,049
1,523,250
456,472
Income tax expense
90,678
27,306
306,981
101,566
Income from continuing
operations
80,443
61,743
1,216,269
354,906
Income from discontinued operations,
net of tax
399
27,777
170,672
52,963
Net income
$
80,842
$
89,520
$
1,386,941
$
407,869
Earnings per common share - basic
(a)
Continuing operations
$
0.21
$
0.16
$
3.12
$
0.91
Discontinued operations
—
0.07
0.44
0.14
Total earnings per common share -
basic
$
0.21
$
0.23
$
3.55
$
1.05
Earnings per common share - diluted
(a)
Continuing operations
$
0.21
$
0.16
$
3.10
$
0.91
Discontinued operations
—
0.07
0.43
0.14
Total earnings per common share -
diluted
$
0.21
$
0.23
$
3.53
$
1.04
Weighted average shares
outstanding
Basic
387,604
390,747
390,291
389,655
Diluted
389,002
393,575
392,411
392,121
Cash dividends per common share
$
0.50
$
0.49
$
1.98
$
1.94
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 2022 relate to the 13-week
and 52-week fiscal periods ended April 2, 2022 and all references
to periods ended March 2021 relate to the 14-week and 53-week
fiscal periods ended April 3, 2021.
(a) Amounts have been calculated
using unrounded numbers.
VF CORPORATION
Condensed Consolidated Balance
Sheets
(Unaudited)
(In thousands)
March
March
2022
2021
ASSETS
Current assets
Cash and equivalents
$
1,275,943
$
815,750
Accounts receivable, net
1,467,842
1,298,020
Inventories
1,418,673
1,061,839
Short-term investments
—
598,806
Other current assets
425,622
423,877
Current assets of discontinued
operations
—
587,578
Total current assets
4,588,080
4,785,870
Property, plant and equipment,
net
1,041,777
975,876
Goodwill and intangible assets,
net
5,394,158
5,454,972
Operating lease right-of-use
assets
1,247,056
1,474,434
Other assets
1,071,137
1,062,877
Total assets
$
13,342,208
$
13,754,029
LIABILITIES AND STOCKHOLDERS'
EQUITY
Current liabilities
Short-term borrowings
$
335,462
$
11,061
Current portion of long-term debt
501,051
1,023
Accounts payable
562,992
463,208
Accrued liabilities
1,915,892
1,609,928
Current liabilities of discontinued
operations
—
125,257
Total current liabilities
3,315,397
2,210,477
Long-term debt
4,584,261
5,709,149
Operating lease liabilities
1,023,759
1,236,461
Other liabilities
888,436
1,541,778
Total liabilities
9,811,853
10,697,865
Stockholders' equity
3,530,355
3,056,164
Total liabilities and stockholders'
equity
$
13,342,208
$
13,754,029
VF CORPORATION
Condensed Consolidated
Statements of Cash Flows
(Unaudited)
(In thousands)
Twelve Months Ended
March
2022
2021
Operating activities
Net income
$
1,386,941
$
407,869
Income from discontinued operations, net
of tax
170,672
52,963
Income from continuing operations, net of
tax
1,216,269
354,906
Impairment of intangible assets
—
20,361
Depreciation and amortization
266,935
269,081
Reduction in the carrying amount of
right-of-use assets
410,132
427,594
Other adjustments
(1,035,138
)
161,312
Cash provided by operating activities -
continuing operations
858,198
1,233,254
Cash provided by operating activities -
discontinued operations
6,090
79,971
Cash provided by operating activities
864,288
1,313,225
Investing activities
Business acquisitions, net of cash
received
3,760
(2,009,151
)
Proceeds from sale of businesses, net of
cash sold
616,928
—
Purchases of short-term investments
—
(800,000
)
Proceeds from sale and maturities of
short-term investments
598,806
200,000
Capital expenditures
(245,449
)
(198,658
)
Software purchases
(82,871
)
(75,542
)
Other, net
13,086
(8,634
)
Cash provided (used) by investing
activities - continuing operations
904,260
(2,891,985
)
Cash used by investing activities -
discontinued operations
(525
)
(3,633
)
Cash provided (used) by investing
activities
903,735
(2,895,618
)
Financing activities
Net increase (decrease) from short-term
borrowings and long-term debt
(182,292
)
1,755,224
Share repurchases
(350,004
)
—
Cash dividends paid
(773,205
)
(756,784
)
Proceeds from issuance of Common Stock,
net of payments for tax withholdings
36,654
54,438
Cash provided (used) by financing
activities
(1,268,847
)
1,052,878
Effect of foreign currency rate changes
on cash, cash equivalents and restricted cash
(73,299
)
(30,603
)
Net change in cash, cash equivalents
and restricted cash
425,877
(560,118
)
Cash, cash equivalents and restricted
cash – beginning of year
851,205
1,411,323
Cash, cash equivalents and restricted
cash – end of period
$
1,277,082
$
851,205
VF CORPORATION
Supplemental Financial
Information
Reportable Segment
Information
(Unaudited)
(In thousands)
Three Months Ended
March
% Change
% Change Constant Currency
(a)
2022
2021
Segment revenues
Outdoor
$
1,274,766
$
1,060,923
20%
23%
Active
1,275,520
1,262,217
1%
3%
Work
274,150
259,517
6%
7%
Other (b)
228
15
*
*
Total segment revenues
$
2,824,664
$
2,582,672
9%
12%
Segment profit
Outdoor
$
132,762
$
58,681
Active
170,038
180,835
Work
42,843
13,469
Other (b)
110
3,912
Total segment profit
345,753
256,897
Impairment of indefinite-lived
intangible assets
—
(12,400
)
Corporate and other expenses
(143,702
)
(119,604
)
Interest, net
(30,930
)
(35,844
)
Income from continuing operations
before income taxes
$
171,121
$
89,049
(a)
Refer to constant currency
definition on the following pages.
(b)
Other is included for purposes of
reconciliation of revenues and profit, but it is not considered a
reportable segment. Includes results primarily related to the sale
of non-VF products and sourcing activities related to transition
services.
* Calculation not meaningful
VF CORPORATION
Supplemental Financial
Information
Reportable Segment
Information
(Unaudited)
(In thousands)
Twelve Months Ended
March
% Change
% Change Constant Currency
(a)
% Change Organic (b)
% Change Constant Currency and
Organic (a) (b)
2022
2021
Segment revenues
Outdoor
$
5,327,568
$
4,127,601
29%
28%
29%
28%
Active
5,380,338
4,160,856
29%
29%
19%
18%
Work
1,133,149
945,680
20%
19%
20%
19%
Other (c)
785
4,693
*
*
*
*
Total segment revenues
$
11,841,840
$
9,238,830
28%
27%
23%
23%
Segment profit (loss)
Outdoor
$
795,523
$
342,212
Active
979,746
648,467
Work
193,492
27,141
Other (c)
(586
)
(5,410
)
Total segment profit
1,968,175
1,012,410
Impairment of indefinite-lived
intangible assets (d)
—
(12,400
)
Corporate and other expenses
(309,817
)
(417,038
)
Interest, net
(131,463
)
(126,500
)
Loss on debt extinguishment
(3,645
)
—
Income from continuing operations
before income taxes
$
1,523,250
$
456,472
(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, which reflects the one-year anniversary of the acquisition.
Refer to Non-GAAP financial information on "Reconciliation of
Select GAAP Measures to Non-GAAP Measures - Three and Twelve Months
Ended March 2022" 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.
(d) Excludes $8.0 million of impairment
charges related to definite-lived intangible assets, which are
primarily recorded in the Work segment, in the twelve months ended
March 2021.
* Calculation not meaningful
VF CORPORATION
Supplemental Financial
Information
Reportable Segment Information
– Constant Currency Basis
(Unaudited)
(In thousands)
Three Months Ended March
2022
As Reported
Adjust for Foreign
under GAAP
Currency Exchange
Constant Currency
Segment revenues
Outdoor
$
1,274,766
$
27,542
$
1,302,308
Active
1,275,520
30,675
1,306,195
Work
274,150
2,532
276,682
Other (a)
228
—
228
Total segment revenues
$
2,824,664
$
60,749
$
2,885,413
Segment profit
Outdoor
$
132,762
$
2,554
$
135,316
Active
170,038
7,845
177,883
Work
42,843
593
43,436
Other (a)
110
(5
)
105
Total segment profit
345,753
10,987
356,740
Corporate and other expenses
(143,702
)
(225
)
(143,927
)
Interest, net
(30,930
)
—
(30,930
)
Income from continuing operations
before income taxes
$
171,121
$
10,762
$
181,883
Diluted earnings per share
growth
32
%
15
%
47
%
(a) 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.
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
2022
As Reported
Adjust for Foreign
under GAAP
Currency Exchange
Constant Currency
Segment revenues
Outdoor
$
5,327,568
$
(26,673
)
$
5,300,895
Active
5,380,338
(32,254
)
5,348,084
Work
1,133,149
(6,914
)
1,126,235
Other (a)
785
—
785
Total segment revenues
$
11,841,840
$
(65,841
)
$
11,775,999
Segment profit (loss)
Outdoor
$
795,523
$
(5,306
)
$
790,217
Active
979,746
(5,507
)
974,239
Work
193,492
(1,601
)
191,891
Other (a)
(586
)
(58
)
(644
)
Total segment profit
1,968,175
(12,472
)
1,955,703
Corporate and other expenses
(309,817
)
946
(308,871
)
Interest, net
(131,463
)
—
(131,463
)
Loss on debt extinguishment
(3,645
)
—
(3,645
)
Income from continuing operations
before income taxes
$
1,523,250
$
(11,526
)
$
1,511,724
Diluted earnings per share
growth
242
%
(2
)%
240
%
(a) 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.
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
2022
(Unaudited)
(In thousands, except per
share amounts)
Three Months Ended March 2022
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
$
2,824,664
$
—
$
—
$
—
$
2,824,664
$
—
$
2,824,664
Gross profit
1,465,872
—
7,376
—
1,473,248
—
1,473,248
Percent
51.9
%
52.2
%
52.2
%
Operating income
192,392
8,613
22,736
—
223,741
—
223,741
Percent
6.8
%
7.9
%
7.9
%
Diluted earnings per share from
continuing operations (e)
0.21
0.01
0.06
0.17
0.45
—
0.45
Twelve Months Ended March 2022
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
$
11,841,840
$
—
$
—
$
—
$
11,841,840
$
(438,482
)
$
11,403,358
Gross profit
6,455,447
—
29,320
—
6,484,767
(263,988
)
6,220,779
Percent
54.5
%
54.8
%
54.6
%
Operating income
1,632,204
(143,267
)
60,407
—
1,549,344
(93,847
)
1,455,497
Percent
13.8
%
13.1
%
12.8
%
Diluted earnings per share from
continuing operations (e)
3.10
(0.36
)
0.13
0.30
3.18
(0.19
)
2.98
(a) Transaction and deal related
activities include activities associated with the acquisition of
Supreme Holdings, Inc. ("Supreme") for the three and twelve months
ended March 2022. Transaction and deal related activities include
an increase in the estimated fair value of the contingent
consideration liability of $8.0 million and a decrease of $150.0
million for the three and twelve months ended March 2022,
respectively, and integration costs of $0.6 million and $6.7
million for the three and twelve months ended March 2022,
respectively. The transaction and deal related activities resulted
in a net tax benefit of $2.9 million and net tax expense of $2.2
million in the three and twelve months ended March 2022,
respectively, primarily related to the impact of the changes in the
estimated fair value of the contingent consideration liability on
the income tax calculations.
(b) Specified strategic business decisions
include costs related to VF's business model transformation of $8.2
million and $10.4 million in the three and twelve months ended
March 2022, 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 $5.8 million and $41.3 million in the three
and twelve months ended March 2022, respectively. Also included in
the adjustments are specific charges related to certain assets
impacted by the conflict in Ukraine of $8.7 million in the three
and twelve months ended March 2022. The specified strategic
business decisions also include non-operating income of $1.5
million during the twelve months ended March 2022, associated with
VF's transformation initiatives. The specified strategic business
decisions resulted in a net tax benefit of $1.3 million and $6.5
million in the three and twelve months ended March 2022,
respectively.
(c) Tax items include $67.3 million and
$119.2 million net tax expense associated with certain discrete tax
adjustments recognized during the three and twelve months ended
March 2022, respectively. This is comprised of $67.3 million tax
expense during the three and twelve months ended March 2022 related
to changes to deferred tax benefits previously recognized under
Swiss Tax Reform, and $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 recognized during the twelve months ended March
2022.
(d) The contribution from acquisition
represents the operating results of Supreme for the nine months
ended December 2021, which reflects the one-year anniversary of the
acquisition. 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 389,002,000 and 392,411,000 weighted
average common shares for the three and twelve months ended March
2022, 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 nine months ended December 2021). Contribution
from acquisition also excludes transaction and deal related costs.
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 Twelve Months Ended March
2021
(Unaudited)
(In thousands, except per
share amounts)
Three Months Ended March 2021
As Reported under GAAP
Transaction and Deal Related
Costs (a)
Specified Strategic Business
Decisions (b)
Adjusted
Revenues
$
2,582,672
$
—
$
—
$
2,582,672
Gross profit
1,346,273
3,419
12,542
1,362,234
Percent
52.1
%
52.7
%
Operating income
122,493
11,845
38,304
172,642
Percent
4.7
%
6.7
%
Diluted earnings per share from
continuing operations (c)
0.16
0.02
0.09
0.27
Twelve Months Ended March 2021
As Reported under GAAP
Transaction and Deal Related
Costs (a)
Specified Strategic Business
Decisions (b)
Adjusted
Revenues
$
9,238,830
$
—
$
—
$
9,238,830
Gross profit
4,868,050
3,829
55,141
4,927,020
Percent
52.7
%
53.3
%
Operating income
607,631
18,977
115,167
741,775
Percent
6.6
%
8.0
%
Diluted earnings per share from
continuing operations (c)
0.91
0.04
0.36
1.31
(a) Transaction and deal related costs
include expenses associated with the acquisition and integration of
Supreme Holdings, Inc. ("Supreme") of $11.8 million and $18.4
million for the three and twelve months ended March 2021,
respectively. Transaction and deal related costs also include
expenses associated with the anticipated sale of the Occupational
Workwear business of $0.5 million, that did not meet the criteria
for discontinued operations, for the twelve months ended March
2021. The transaction and deal related costs resulted in a net tax
benefit of $3.0 million and $4.7 million in the three and twelve
months ended March 2021, respectively.
(b) Specified strategic business decisions
for the three and twelve months ended March 2021 include costs
related to VF's business model transformation of $21.6 million in
the three and twelve months ended March 2021, related primarily to
asset impairments, restructuring and other costs. Specified
strategic business decisions also include costs related to a
transformation initiative for our Asia-Pacific regional operations
of $3.7 million and $24.0 million in the three and twelve months
ended March 2021, respectively. 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 $13.0 million and
$65.3 million during the three and twelve months ended March 2021,
respectively. The costs also include 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
twelve months ended March 2021. The twelve months ended March 2021
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 $2.8 million and $14.5
million in the three and twelve months ended March 2021,
respectively.
(c) Amounts shown in the table have been
calculated using unrounded numbers. The diluted earnings per share
impacts were calculated using 393,575,000 and 392,121,000 weighted
average common shares for the three and twelve months ended March
2021, 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 March
2022
Twelve Months Ended March
2022
Top 4 Brand Revenue Growth
Americas
EMEA
APAC
Global
Americas
EMEA
APAC
Global
Vans®
% change
1%
14%
(24)%
0%
24%
31%
(4)%
20%
% change constant currency*
1%
22%
(22)%
2%
23%
30%
(7)%
19%
The North Face®
% change
35%
12%
24%
24%
29%
40%
28%
33%
% change constant currency*
35%
18%
22%
26%
29%
40%
23%
32%
Timberland®
% change
20%
14%
(20)%
9%
35%
18%
(11)%
20%
% change constant currency*
20%
21%
(20)%
12%
34%
19%
(13)%
20%
Dickies®
% change
16%
9%
(21)%
7%
38%
(13)%
(11)%
19%
% change constant currency*
16%
16%
(20)%
8%
38%
(13)%
(13)%
19%
*Refer to constant currency definition on
previous pages.
VF CORPORATION
Supplemental Financial
Information
Geographic and Channel Revenue
Information
(Unaudited)
Three Months Ended March
2022
% Change
% Change Constant
Currency*
Geographic
Revenue Growth
U.S.
12%
12%
EMEA
15%
22%
APAC
(11)%
(10)%
Greater China
(13)%
(14)%
Americas (non-U.S.)
17%
18%
International
7%
11%
Global
9%
12%
Twelve Months Ended March
2022
% Change
% Change Constant
Currency*
% Change Organic(a)
% Change Constant Currency and
Organic*(a)
Geographic
Revenue Growth
U.S.
33%
33%
27%
27%
EMEA
30%
30%
27%
28%
APAC
7%
4%
0%
(3)%
Greater China
1%
(4)%
1%
(4)%
Americas (non-U.S.)
37%
32%
37%
32%
International
23%
22%
19%
18%
Global
28%
27%
23%
23%
Three Months Ended March
2022
% Change
% Change Constant
Currency*
Channel Revenue
Growth
Wholesale (b)
16%
19%
Direct-to-consumer
1%
3%
Digital
(10)%
(8)%
Twelve Months Ended March
2022
% Change
% Change Constant
Currency*
% Change Organic(a)
% Change Constant Currency and
Organic*(a)
Channel Revenue
Growth
Wholesale (b)
26%
25%
26%
25%
Direct-to-consumer
31%
31%
21%
20%
Digital
14%
13%
(1)%
(2)%
As of March
2022
2021
DTC Store
Count
Total
1,322
1,374
*Refer to constant currency definition on
previous pages.
(a) Excludes acquisition representing the
operating results of Supreme for the nine months ended December
2021, which reflects the one-year anniversary of the acquisition.
Refer to Non-GAAP financial information on "Reconciliation of
Select GAAP Measures to Non-GAAP Measures - Three and Twelve Months
Ended March 2022" 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/20220519005326/en/
Investor Contact: Allegra
Perry ir@vfc.com Media Contact:
Colin Wheeler corporate_communications@vfc.com
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