VF Corporation (NYSE: VFC) today announced financial results for its first quarter (Q1'FY24) ended July 1, 2023.

Q1'FY24 Financial Highlights

  • Revenue down 8% to $2.1 billion
  • Loss per share down 2% to $(0.15); adjusted loss per share $(0.15) vs. Q1'FY23 adjusted earnings per share $0.09

Bracken Darrell, President and CEO, said: “I am honored to lead this great company into the next chapter of its history. I am passionate about building brands through a design-and-innovation lens and creating unique and differentiated products, immersive storytelling and elevated experiences for consumers. VF has a portfolio of globally recognized, iconic brands, a deeply embedded purpose and impressive talent, all of which gives me every confidence we have all the necessary ingredients to unlock the company's significant potential and return to delivering strong, sustainable and profitable growth which will translate to elevated shareholder returns.”

Q1’FY24 Operating Highlights

  • The North Face® delivered its 10th consecutive quarter of double-digit constant dollar revenue growth, up 12%
  • Vans® down 22%, impacted by wholesale in the Americas (down 39% and down 40% in constant dollars) as the turnaround work continues at the brand
  • Wholesale down 12%, including wholesale in the Americas down 18%
  • Direct-to-Consumer (DTC) down 3% (down 2% in constant dollars) and up 6% excluding Vans® (up 7% in constant dollars)
  • International markets increased by 3% (up 4% in constant dollars)
    • Greater China up 24% (up 31% in constant dollars), leading further improvement in the APAC region of up 13% (up 18% in constant dollars)
    • EMEA revenue down 2% (down 3% in constant dollars), reflecting continued growth in DTC, but lower wholesale revenue

FY24 Outlook

  • The company reiterates full year EPS guidance range of $2.05 to $2.25
  • Revenue is now expected to be modestly down to flat for the year, reflecting ongoing weakness in our wholesale business and a longer than anticipated turnaround for Vans
  • Free cash flow is expected to be in line with previous guidance of approximately $900 million

Matt Puckett, CFO, said: “While our Q1 performance is not reflective of our standards, we achieved our earnings target in the quarter. We remain focused on improving our operational execution, although it will take time for our revenue performance to benefit from actions that are underway. We are well positioned to advance our key priorities this year with an emphasis on increasing operating earnings through improved gross margins, generating healthy cash flow and reducing debt, all of which lead to a strengthened financial position.”

Summary Revenue Information

(Unaudited)

 

 

 

Three Months Ended June

(Dollars in millions)

 

2023

 

2022

 

% Change

 

% Change (constant currency)

Brand:

 

 

 

 

 

 

 

 

Vans®

 

$

737.5

 

$

946.8

 

(22

)%

 

(22

)%

The North Face®

 

 

538.2

 

 

481.1

 

12

%

 

12

%

Timberland®

 

 

253.8

 

 

269.5

 

(6

)%

 

(6

)%

Dickies®

 

 

136.6

 

 

170.4

 

(20

)%

 

(19

)%

Other Brands

 

 

420.2

 

 

393.9

 

7

%

 

7

%

VF Revenue

 

$

2,086.3

 

$

2,261.6

 

(8

)%

 

(8

)%

 

 

 

 

 

 

 

 

 

Region:

 

 

 

 

 

 

 

 

Americas

 

$

1,183.8

 

$

1,385.1

 

(15

)%

 

(15

)%

EMEA

 

 

584.3

 

 

594.6

 

(2

)%

 

(3

)%

APAC

 

 

318.2

 

 

281.9

 

13

%

 

18

%

VF Revenue

 

$

2,086.3

 

$

2,261.6

 

(8

)%

 

(8

)%

International

 

$

1,026.7

 

$

992.0

 

3

%

 

4

%

 

 

 

 

 

 

 

 

 

Channel:

 

 

 

 

 

 

 

 

DTC

 

$

973.6

 

$

999.1

 

(3

)%

 

(2

)%

Wholesale (a)

 

 

1,112.7

 

 

1,262.5

 

(12

)%

 

(12

)%

VF Revenue

 

$

2,086.3

 

$

2,261.6

 

(8

)%

 

(8

)%

All references to the three months ended June 2023 relate to the 13-week fiscal period ended July 1, 2023 and all references to the three months ended June 2022 relate to the 13-week fiscal period ended July 2, 2022.

Note: Amounts may not sum due to rounding

(a) Royalty revenues are included in the wholesale channel for all periods.

Q1'FY24 Income Statement Review

  • Revenue $2.1 billion, down 8% with the big four brands down 11% and the balance of the portfolio up 7%
    • The North Face® revenue $0.5 billion, up 12%
    • Vans® revenue $0.7 billion, down 22%
  • Gross margin 52.8%, down 110 basis points; Adjusted gross margin 52.8%, down 130 basis points due primarily to increased promotions
    • Adjusted gross margin headwinds include 200 basis points of unfavorable rate impact (including promotions) and 10 basis points of adverse foreign currency exchange rates, partially offset by 80 basis points of mix benefits
  • Operating margin (0.4)%, down 320 basis points; adjusted operating margin (0.4)%, down 380 basis points
    • Adjusted operating margin contraction driven by 130 basis points of unfavorable gross margin impact and 250 basis points of deleverage
  • Loss per share of $(0.15), down 2%; adjusted loss per share $(0.15) vs. Q1'FY23 adjusted earnings per share $0.09

Q1'FY24 Balance Sheet Review

  • Inventories increased by $446 million during Q1’FY24, up 19% relative to last year; primarily driven by core and excess replenishment inventory
    • VF modified terms with the majority of its suppliers in the first quarter of fiscal 2023 to take ownership of inventory near point of shipment rather than destination; this program has now been fully lapped in Q1
  • Accounts payable increased 25% relative to last year, which was largely driven by the modified terms with the majority of suppliers

Q1’FY24 Shareholder Returns

  • Return of $117 million to shareholders through cash dividends
  • VF’s Board of Directors declared a quarterly dividend of $0.30 per share. This dividend will be payable on September 20, 2023, to shareholders of record at the close of business on September 11, 2023. Subject to approval by its Board of Directors, VF intends to continue to pay quarterly dividends

Webcast Information

VF will host its first quarter fiscal 2024 conference call beginning at 4:30 p.m. Eastern Time today. The conference call will be broadcast live via the Internet, accessible at ir.vfc.com. For those unable to listen to the live broadcast, an archived version will be available at the same location.

About VF

Founded in 1899, VF Corporation is one of the world’s largest apparel, footwear and accessories companies connecting people to the lifestyles, activities and experiences they cherish most through a family of iconic outdoor, active and workwear brands including Vans®, The North Face®, Timberland® and Dickies®. Our purpose is to power movements of sustainable and active lifestyles for the betterment of people and our planet. We connect this purpose with a relentless drive to succeed to create value for all stakeholders and use our company as a force for good. For more information, please visit vfc.com.

Financial Presentation Disclosure

All per share amounts are presented on a diluted basis. This release refers to “reported” and “constant dollar” 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 “adjusted” amounts, a term that is described under the heading below “Adjusted Amounts - Excluding Transaction and Deal Related Activities.” Unless otherwise noted, “reported” and “adjusted” amounts are the same.

Constant Currency - Excluding the Impact of Foreign Currency

This release refers to “reported” amounts in accordance with U.S. generally accepted accounting principles (“GAAP”), which include translation and transactional impacts from foreign currency exchange rates. This release also refers to “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.

Adjusted Amounts - Excluding Transaction and Deal Related Activities

The adjusted amounts in this release exclude transaction and deal related activities associated with the review of strategic alternatives for the Global Packs business, consisting of the Kipling®, Eastpak® and JanSport® brands. Total transaction and deal related activities include costs of approximately $1 million in the first quarter of fiscal 2024.

All adjusted amounts referenced herein exclude the effects of these amounts.

Reconciliations of measures calculated in accordance with GAAP to adjusted amounts are presented in the supplemental financial information included with this release, which identifies and quantifies all excluded items, and provides management’s view of why this information is useful to investors. The company also provides guidance on a non-GAAP basis as we cannot predict certain elements which are included in reported GAAP results.

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: the level of consumer demand for apparel and footwear; disruption to VF’s distribution system; changes in global economic conditions and the financial strength of VF’s customers, including as a result of current inflationary pressures; fluctuations in the price, availability and quality of raw materials and finished products; disruption and volatility in the global capital and credit markets; VF’s response to changing fashion trends, evolving consumer preferences and changing patterns of consumer behavior; VF's ability to maintain the image, health and equity of its brands; 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 find and amplify consumer tailwinds, build brands on multiple growth horizons and leverage platforms for speed to scale and efficiency; 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; VF’s ability to recruit, develop or retain key executive or employee talent or successfully transition executives; continuity of members of VF’s management; changes in the availability and cost of labor; VF’s ability to protect trademarks and other intellectual property rights; possible goodwill and other asset impairment such as the impairment charges related to the Supreme® reporting unit goodwill and indefinite-lived trademark intangible asset; maintenance by VF’s licensees and distributors of the value of VF’s brands; VF’s ability to execute acquisitions and dispositions, integrate acquisitions and manage its brand portfolio; business resiliency in response to natural or man-made economic, public health, 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, including any potential effects from climate change; VF's indebtedness and its ability to obtain financing on favorable terms, if needed, could prevent VF from fulfilling its financial obligations; VF's ability to pay and declare dividends or repurchase its stock in the future; climate change and increased focus on environmental, social and governance issues; VF's ability to execute on its sustainability strategy and achieve its sustainability related goals and targets; risks arising from the widespread outbreak of an illness or any other communicable disease, or any other public health crisis, including the coronavirus (COVID-19) global pandemic; and tax risks associated with the spin-off of our Jeanswear business completed in 2019. More information on potential factors that could affect VF’s financial results is included from time to time in VF’s public reports filed with the SEC, including VF’s Annual Report on Form 10-K, and Quarterly Reports on Form 10-Q, and Forms 8-K filed or furnished with the SEC.

VF CORPORATION

Condensed Consolidated Statements of Operations

(Unaudited)

(In thousands, except per share amounts)

 

 

 

Three Months Ended June

 

 

2023

 

2022

Net revenues

 

$

2,086,336

 

 

$

2,261,595

 

Costs and operating expenses

 

 

 

 

Cost of goods sold

 

 

985,269

 

 

 

1,042,982

 

Selling, general and administrative expenses

 

 

1,110,059

 

 

 

1,155,251

 

Total costs and operating expenses

 

 

2,095,328

 

 

 

2,198,233

 

Operating income (loss)

 

 

(8,992

)

 

 

63,362

 

Interest expense, net

 

 

(49,719

)

 

 

(31,262

)

Other income (expense), net

 

 

(3,567

)

 

 

(94,714

)

Loss before income taxes

 

 

(62,278

)

 

 

(62,614

)

Income tax benefit

 

 

(4,853

)

 

 

(6,654

)

Net loss

 

$

(57,425

)

 

$

(55,960

)

Net loss per common share (a)

 

 

 

 

Basic

 

$

(0.15

)

 

$

(0.14

)

Diluted

 

$

(0.15

)

 

$

(0.14

)

Weighted average shares outstanding

 

 

 

 

Basic

 

 

388,160

 

 

 

387,563

 

Diluted

 

 

388,160

 

 

 

387,563

 

Cash dividends per common share

 

$

0.30

 

 

$

0.50

 

 

 

 

 

 

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 the three months ended June 2023 and June 2022 relate to the 13-week fiscal period ended July 1, 2023 and the 13-week fiscal period ended July 2, 2022, respectively. References to March 2023 relate to information as of April 1, 2023.

(a) Amounts have been calculated using unrounded numbers.

VF CORPORATION

Condensed Consolidated Balance Sheets

(Unaudited)

(In thousands)

 

 

 

June

 

March

 

June

 

 

2023

 

2023

 

2022

ASSETS

 

 

 

 

 

 

Current assets

 

 

 

 

 

 

Cash and equivalents

 

$

806,529

 

$

814,887

 

$

528,029

Accounts receivable, net

 

 

1,214,223

 

 

1,610,295

 

 

1,249,713

Inventories

 

 

2,787,021

 

 

2,292,790

 

 

2,341,395

Other current assets

 

 

405,784

 

 

434,737

 

 

492,569

Total current assets

 

 

5,213,557

 

 

5,152,709

 

 

4,611,706

Property, plant and equipment, net

 

 

943,163

 

 

942,440

 

 

1,007,853

Goodwill and intangible assets, net

 

 

4,614,442

 

 

4,621,234

 

 

5,343,684

Operating lease right-of-use assets

 

 

1,349,725

 

 

1,372,182

 

 

1,227,462

Other assets

 

 

1,923,011

 

 

1,901,923

 

 

1,021,048

Total assets

 

$

14,043,898

 

$

13,990,488

 

$

13,211,753

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

Short-term borrowings

 

$

58,520

 

$

11,491

 

$

827,380

Current portion of long-term debt

 

 

928,736

 

 

924,305

 

 

1,058

Accounts payable

 

 

1,282,313

 

 

936,319

 

 

1,022,755

Accrued liabilities

 

 

1,546,866

 

 

1,673,651

 

 

1,612,804

Total current liabilities

 

 

3,816,435

 

 

3,545,766

 

 

3,463,997

Long-term debt

 

 

5,722,448

 

 

5,711,014

 

 

4,468,399

Operating lease liabilities

 

 

1,155,852

 

 

1,171,941

 

 

1,006,274

Other liabilities

 

 

632,400

 

 

651,054

 

 

920,590

Total liabilities

 

 

11,327,135

 

 

11,079,775

 

 

9,859,260

Stockholders' equity

 

 

2,716,763

 

 

2,910,713

 

 

3,352,493

Total liabilities and stockholders' equity

 

$

14,043,898

 

$

13,990,488

 

$

13,211,753

VF CORPORATION

Condensed Consolidated Statements of Cash Flows

(Unaudited)

(In thousands)

 

 

 

 

 

Three Months Ended June

 

 

2023

 

2022

Operating activities

 

 

 

 

Net loss

 

$

(57,425

)

 

$

(55,960

)

Depreciation and amortization

 

 

67,075

 

 

 

66,754

 

Reduction in the carrying amount of right-of-use assets

 

 

95,728

 

 

 

93,337

 

Other adjustments

 

 

58,197

 

 

 

(462,451

)

Cash provided (used) by operating activities

 

 

163,575

 

 

 

(358,320

)

Investing activities

 

 

 

 

Capital expenditures

 

 

(61,763

)

 

 

(52,657

)

Software purchases

 

 

(22,827

)

 

 

(26,907

)

Other, net

 

 

(5,972

)

 

 

10,045

 

Cash used by investing activities

 

 

(90,562

)

 

 

(69,519

)

Financing activities

 

 

 

 

Contingent consideration payment

 

 

 

 

 

(56,976

)

Net increase (decrease) from short-term borrowings and long-term debt

 

 

46,415

 

 

 

(8,344

)

Cash dividends paid

 

 

(116,575

)

 

 

(194,135

)

Proceeds from issuance of Common Stock, net of (payments) for tax withholdings

 

 

(1,725

)

 

 

(1,766

)

Cash used by financing activities

 

 

(71,885

)

 

 

(261,221

)

Effect of foreign currency rate changes on cash, cash equivalents and restricted cash

 

 

(9,326

)

 

 

(58,988

)

Net change in cash, cash equivalents and restricted cash

 

 

(8,198

)

 

 

(748,048

)

Cash, cash equivalents and restricted cash – beginning of year

 

 

816,319

 

 

 

1,277,082

 

Cash, cash equivalents and restricted cash – end of period

 

$

808,121

 

 

$

529,034

 

VF CORPORATION

Supplemental Financial Information

Reportable Segment Information

(Unaudited)

(In thousands)

 

 

 

 

 

 

 

 

 

Three Months Ended June

 

% Change

 

% Change Constant Currency (a)

 

 

2023

 

2022

 

 

Segment revenues

 

 

 

 

 

 

 

 

Outdoor

 

$

829,697

 

 

$

768,624

 

 

8%

 

8%

Active

 

 

1,066,009

 

 

 

1,253,945

 

 

(15)%

 

(15)%

Work

 

 

190,630

 

 

 

238,878

 

 

(20)%

 

(20)%

Other (b)

 

 

 

 

 

148

 

 

*

 

*

Total segment revenues

 

$

2,086,336

 

 

$

2,261,595

 

 

(8)%

 

(8)%

Segment profit (loss)

 

 

 

 

 

 

 

 

Outdoor

 

$

(43,661

)

 

$

(46,851

)

 

 

 

 

Active

 

 

123,782

 

 

 

214,031

 

 

 

 

 

Work

 

 

6,831

 

 

 

35,002

 

 

 

 

 

Other (b)

 

 

 

 

 

(225

)

 

 

 

 

Total segment profit

 

 

86,952

 

 

 

201,957

 

 

 

 

 

Corporate and other expenses

 

 

(99,511

)

 

 

(233,309

)

 

 

 

 

Interest expense, net

 

 

(49,719

)

 

 

(31,262

)

 

 

 

 

Loss before income taxes

 

$

(62,278

)

 

$

(62,614

)

 

 

 

 

 

 

 

 

 

 

 

 

 

(a) Refer to constant currency definition on the following pages.

(b) Other is included for purposes of reconciliation of revenues and profit, but it is not considered a reportable segment. Other primarily includes sourcing activities related to transition services.

* Calculation not meaningful

VF CORPORATION

Supplemental Financial Information

Reportable Segment Information – Constant Currency Basis

(Unaudited)

(In thousands)

 

 

 

 

 

Three Months Ended June 2023

 

 

As Reported

 

Adjust for Foreign

 

 

 

 

under GAAP

 

Currency Exchange

 

Constant Currency

Segment revenues

 

 

 

 

 

 

Outdoor

 

$

829,697

 

 

$

2,333

 

 

$

832,030

 

Active

 

 

1,066,009

 

 

 

67

 

 

 

1,066,076

 

Work

 

 

190,630

 

 

 

1,152

 

 

 

191,782

 

Other

 

 

 

 

 

 

 

 

 

Total segment revenues

 

$

2,086,336

 

 

$

3,552

 

 

$

2,089,888

 

Segment profit (loss)

 

 

 

 

 

 

Outdoor

 

$

(43,661

)

 

$

1,115

 

 

$

(42,546

)

Active

 

 

123,782

 

 

 

478

 

 

 

124,260

 

Work

 

 

6,831

 

 

 

69

 

 

 

6,900

 

Other

 

 

 

 

 

 

 

 

 

Total segment profit

 

 

86,952

 

 

 

1,662

 

 

 

88,614

 

Corporate and other expenses

 

 

(99,511

)

 

 

(272

)

 

 

(99,783

)

Interest expense, net

 

 

(49,719

)

 

 

 

 

 

(49,719

)

Loss before income taxes

 

$

(62,278

)

 

$

1,390

 

 

$

(60,888

)

Diluted net loss per share growth

 

 

(2

)%

 

 

1

%

 

 

(1

)%

 

 

 

 

 

 

 

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 Months Ended June 2023

(Unaudited)

(In thousands, except per share amounts)

 

 

 

 

 

 

 

Three Months Ended June 2023

 

As Reported

under GAAP

 

Transaction and Deal Related Activities (a)

 

Adjusted

Revenues

 

$

2,086,336

 

 

$

 

$

2,086,336

 

 

 

 

 

 

 

 

Gross profit

 

 

1,101,067

 

 

 

 

 

1,101,067

 

Percent

 

 

52.8

%

 

 

 

 

52.8

%

 

 

 

 

 

 

 

Operating loss

 

 

(8,992

)

 

 

1,118

 

 

(7,874

)

Percent

 

 

(0.4

)%

 

 

 

 

(0.4

)%

 

 

 

 

 

 

 

Diluted net loss per share (b)

 

 

(0.15

)

 

 

 

 

(0.15

)

 

 

 

 

 

 

 

(a) Transaction and deal related activities reflect activities associated with the review of strategic alternatives for the Global Packs business, consisting of the Kipling®, Eastpak® and JanSport® brands, which totaled $1.1 million for the three months ended June 2023. The transaction and deal related activities resulted in a net tax benefit of $0.3 million in the three months ended June 2023.

(b) Amounts shown in the table have been calculated using unrounded numbers. The diluted net loss per share impacts were calculated using 388,160,000 weighted average common shares for the three months ended June 2023.

 

 

 

 

 

 

 

Non-GAAP Financial Information

The financial information above has been presented on a GAAP basis and on an adjusted basis, which excludes the impact of transaction and deal related activities. The adjusted presentation provides non-GAAP measures. Management believes these measures provide investors with useful supplemental information regarding VF's underlying business trends and the performance of VF's ongoing operations and are useful for period-over-period comparisons of such operations.

Management uses the above financial measures internally in its budgeting and review process and, in some cases, as a factor in determining compensation. While management believes that these non-GAAP financial measures are useful in evaluating the business, this information should be considered as supplemental in nature and should be viewed in addition to, and not in lieu of or superior to, VF's operating performance measures calculated in accordance with GAAP. In addition, these non-GAAP financial measures may not be the same as similarly titled measures presented by other companies.

VF CORPORATION

Supplemental Financial Information

Reconciliation of Select GAAP Measures to Non-GAAP Measures - Three Months Ended June 2022

(Unaudited)

(In thousands, except per share amounts)

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended June 2022

 

As Reported

under GAAP

 

Transaction and Deal Related Activities (a)

 

Specified Strategic Business Decisions (b)

 

Pension Settlement Charge (c)

 

Adjusted

Revenues

 

$

2,261,595

 

 

$

 

$

 

$

 

$

2,261,595

 

 

 

 

 

 

 

 

 

 

 

 

Gross profit

 

 

1,218,613

 

 

 

 

 

5,081

 

 

 

 

1,223,694

 

Percent

 

 

53.9

%

 

 

 

 

 

 

 

 

54.1

%

 

 

 

 

 

 

 

 

 

 

 

Operating income

 

 

63,362

 

 

 

331

 

 

13,778

 

 

 

 

77,471

 

Percent

 

 

2.8

%

 

 

 

 

 

 

 

 

3.4

%

 

 

 

 

 

 

 

 

 

 

 

Diluted earnings (loss) per share (d)

 

 

(0.14

)

 

 

 

 

0.03

 

 

0.20

 

 

0.09

 

 

 

 

 

 

 

 

 

 

 

 

(a) Transaction and deal related activities include activities associated with the acquisition of Supreme Holdings, Inc. ("Supreme") for the three months ended June 2022. Transaction and deal related activities include integration costs of $0.3 million for the three months ended June 2022. The transaction and deal related activities resulted in a net tax benefit of $0.1 million in the three months ended June 2022.

(b) Specified strategic business decisions for the three months ended June 2022 include costs related to VF's business model transformation of $6.0 million in the three months ended June 2022, 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 $7.8 million in the three months ended June 2022. The specified strategic business decisions resulted in a net tax benefit of $2.2 million in the three months ended June 2022.

(c) A pension settlement charge of $91.8 million was recorded in the 'Other income (expense), net' line item in the three months ended June 2022. The pension settlement charge resulted from the purchase of a group annuity contract, which was an action taken to streamline administration, manage financial risk associated with pension plans, and to transfer a portion of the liability associated with VF's U.S. pension plan to an insurance company. The pension settlement charge resulted in a net tax benefit of $13.8 million in the three months ended June 2022, related to the impact of the settlement charge on the interim tax rate calculation.

(d) Amounts shown in the table have been calculated using unrounded numbers. The GAAP diluted earnings per share was calculated using 387,563,000 weighted average common shares for the three months ended June 2022. The adjusted diluted earnings per share was calculated using 388,396,000 weighted average common shares for the three months ended June 2022.

 

Non-GAAP Financial Information

The financial information above has been presented on a GAAP basis and on an adjusted basis, which excludes the impact of transaction and deal related activities, activity related to specified strategic business decisions and a pension settlement charge. 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 June 2023

Top 4 Brand Revenue Growth

 

Americas

 

EMEA

 

APAC

 

Global

Vans®

 

 

 

 

 

 

 

 

% change

 

(26

)%

 

(17

)%

 

(7

)%

 

(22

)%

% change constant currency*

 

(27

)%

 

(18

)%

 

(3

)%

 

(22

)%

The North Face®

 

 

 

 

 

 

 

 

% change

 

9

%

 

4

%

 

49

%

 

12

%

% change constant currency*

 

9

%

 

2

%

 

57

%

 

12

%

Timberland®

 

 

 

 

 

 

 

 

% change

 

(21

)%

 

6

%

 

22

%

 

(6

)%

% change constant currency*

 

(21

)%

 

4

%

 

26

%

 

(6

)%

Dickies®

 

 

 

 

 

 

 

 

% change

 

(24

)%

 

17

%

 

(21

)%

 

(20

)%

% change constant currency*

 

(24

)%

 

15

%

 

(18

)%

 

(19

)%

 

*Refer to constant currency definition on previous pages.

VF CORPORATION

Supplemental Financial Information

Geographic and Channel Revenue Information

(Unaudited)

 

 

 

Three Months Ended June 2023

 

 

% Change

 

% Change Constant Currency*

Geographic Revenue Growth

 

 

 

 

Americas

 

(15

)%

 

(15

)%

EMEA

 

(2

)%

 

(3

)%

APAC

 

13

%

 

18

%

Greater China

 

24

%

 

31

%

International

 

3

%

 

4

%

Global

 

(8

)%

 

(8

)%

 

 

 

 

 

 

 

Three Months Ended June 2023

 

 

% Change

 

% Change Constant Currency*

Channel Revenue Growth

 

 

 

 

Wholesale (a)

 

(12

)%

 

(12

)%

Direct-to-consumer

 

(3

)%

 

(2

)%

Digital

 

(4

)%

 

(3

)%

 

 

 

 

 

 

 

As of June

 

 

2023

 

2022

DTC Store Count

 

 

 

 

Total

 

1,250

 

 

1,297

 

 

 

 

 

 

*Refer to constant currency definition on previous pages.

(a) Royalty revenues are included in the wholesale channel for all periods.

 

Investor Contact: Allegra Perry ir@vfc.com

Media Contact: Colin Wheeler corporate_communications@vfc.com

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