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VF CORPORATION REPORTS SECOND QUARTER FISCAL 2025 RESULTS
Download as PDF October 28, 2024 4:05pm EDT
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DENVER--(BUSINESS WIRE)-- VF Corporation (NYSE: VFC) today reported financial
results for its second quarter (Q2'FY25) ended September 28, 2024, and the
Company's Board of Directors authorized a quarterly per share dividend of $0.09.
Bracken Darrell, President and CEO, said: "Our results in the quarter met our
expectations and reflect a sequential and broad-based improvement in
year-on-year trends. At the same time, we made further progress on our four
Reinvent priorities and we are on track to reach our previously announced $300
million savings target by the end of FY25. Following the completion of the
Supreme divestiture on October 1, 2024, we delivered on our commitment to pay
down VF’s $1 billion term loan due December 2024. Our Americas regional platform
is fully operational and showing promising signs, while the performance at Vans
is improving. In summary, we advanced our turnaround plan towards a return to
growth and strong, sustainable value creation at VF."
Q2'FY25 Income Statement Review
* Results demonstrated broad-based year-over-year sequential improvement
relative to Q1'FY25, with all key metrics in line with, or above the
company's expectations
* Revenue $2.8 billion, down 6% vs. last year, an improvement vs. Q1'FY25 down
10%
* The North Face® down 3% (down 4% in constant dollars) as expected. This
compares against a strong Q2'FY24 of up 19% (up 17% in constant dollars)
* Vans® down 11% vs. last year, relative to Q1'FY25 down 21% vs. last year
* Gross margin 52.2%, up 120 basis points vs. last year
* Operating margin 9.9%, down 210 basis points vs. last year; adjusted
operating margin down 60 basis points vs. last year to 11.4%
* Earnings (loss) per share (EPS) $0.52 vs. Q2'FY24 $(1.16); adjusted EPS $0.60
vs. Q2'FY24 $0.63
Balance Sheet Review
* Q2'FY25 ending inventories down 13% relative to the prior year
* Net debt at the end of Q2'FY25 was $5.7 billion, down by approximately $446
million relative to last year. Shortly after the fiscal quarter end, VF
received $1.475 billion of net proceeds following the close of the Supreme
sale, allowing VF to further reduce net debt.
Financial Outlook
* For Q3'FY25 VF expects the following on a continuing operations basis:
* Revenue in the range of $2.7 billion to $2.75 billion, down 1% to down 3%
year-over-year in reported dollars, inclusive of an expected negative FX
impact of approximately 100 basis points
* Adjusted operating income in the range of $170 million to $200 million
(Q3'FY24: $218 million)
* For FY25 VF expects free cash flow from continuing operations plus proceeds
from non-core physical asset sales of approximately $425 million, with core
fundamentals in line with previous guidance. Relative to the original full
year guidance of $600 million, the change reflects the sale of Supreme and
additional reinvestment initiatives in the second half of FY25, which are
partially offset by the greater than anticipated proceeds for non-core
physical asset sales.
Summary Revenue Information
(Unaudited)
Three Months Ended September
Six Months Ended September
(Dollars in millions)
2024
2023
% Change
% Change
(constant
currency)
2024
2023
% Change
% Change
(constant
currency)
Brand:
The North Face®
$
1,091.4
$
1,128.8
(3
)%
(4
)%
$
1,615.6
$
1,667.0
(3
)%
(3
)%
Vans®
667.4
748.8
(11
)%
(11
)%
1,249.3
1,486.3
(16
)%
(16
)%
Timberland®
475.3
488.6
(3
)%
(3
)%
704.8
742.5
(5
)%
(5
)%
Dickies®
152.4
171.4
(11
)%
(11
)%
269.2
308.1
(13
)%
(12
)%
Other Brands
371.4
382.4
(3
)%
(3
)%
688.2
684.3
1
%
0
%
VF Revenue
$
2,757.9
$
2,920.1
(6
)%
(6
)%
$
4,527.0
$
4,888.2
(7
)%
(7
)%
Region:
Americas
$
1,355.9
$
1,506.1
(10
)%
(9
)%
$
2,331.6
$
2,624.9
(11
)%
(11
)%
EMEA
1,009.6
1,042.8
(3
)%
(5
)%
1,541.9
1,607.1
(4
)%
(5
)%
APAC
392.5
371.3
6
%
5
%
653.6
656.3
0
%
1
%
VF Revenue
$
2,757.9
$
2,920.1
(6
)%
(6
)%
$
4,527.0
$
4,888.2
(7
)%
(7
)%
International
$
1,572.5
$
1,605.0
(2
)%
(3
)%
$
2,482.2
$
2,578.4
(4
)%
(4
)%
Channel:
DTC
$
914.9
$
997.5
(8
)%
(8
)%
$
1,655.9
$
1,852.8
(11
)%
(10
)%
Wholesale (a)
1,843.0
1,922.7
(4
)%
(5
)%
2,871.1
3,035.4
(5
)%
(6
)%
VF Revenue
$
2,757.9
$
2,920.1
(6
)%
(6
)%
$
4,527.0
$
4,888.2
(7
)%
(7
)%
All references to the periods ended September 2024 relate to the 13-week and
26-week fiscal periods ended September 28, 2024 and all references to the
periods ended September 2023 relate to the 13-week and 26-week fiscal periods
ended September 30, 2023.
Note: Amounts may not sum due to rounding
(a) Royalty revenues are included in the wholesale channel for all periods.
Dividend Declared
VF’s Board of Directors declared a quarterly dividend of $0.09 per share. This
dividend will be payable on December 18, 2024, to shareholders of record at the
close of business on December 10, 2024. Subject to approval by its Board of
Directors, VF intends to continue to pay quarterly dividends.
Webcast Information
VF will host its second quarter fiscal 2025 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.
VF will host its FY25 Investor Day, the first of a two-part investor event, on
October 30, 2024. The event will be broadcast live on the Internet, accessible
at vfc.com/investor-day-2024 beginning at approximately 10:00am until 12:00pm ET
on October 30, 2024. An archived version will be available at the same location
following the event.
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 The North Face®, Vans®, Timberland® and Dickies®. Our
purpose is to power movements of sustainable and active lifestyles for the
betterment of people and our planet. We connect this purpose with a relentless
drive to succeed to create value for all stakeholders and use our company as a
force for good. For more information, please visit vfc.com.
Financial Presentation Disclosure
All per share amounts are presented on a diluted basis. This release refers to
“reported” and “constant dollar” or “constant currency” amounts, terms that are
described under the heading below “Constant Currency - Excluding the Impact of
Foreign Currency.” Unless otherwise noted, “reported” and “constant dollar” or
“constant currency” amounts are the same. This release also refers to
“continuing” and “discontinued” operations amounts, which are concepts described
under the heading “Discontinued Operations - Supreme.” 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 Reinvent and Transaction and Deal Related
Activities.” Unless otherwise noted, “reported” and “adjusted” amounts are the
same.
Discontinued Operations - Supreme
On July 16, 2024, VF entered into a definitive Stock and Asset Purchase
Agreement with EssilorLuxottica S.A. to sell the Supreme® brand business
(“Supreme”). On October 1, 2024, VF completed the sale of Supreme. 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 presented.
Constant Currency - Excluding the Impact of Foreign Currency
This release refers to “reported” amounts in accordance with U.S. generally
accepted accounting principles (“GAAP”), which include translation and
transactional impacts from foreign currency exchange rates. This release also
refers to both “constant dollar” and “constant currency” amounts, which exclude
the impact of translating foreign currencies into U.S. dollars. Reconciliations
of GAAP measures to constant currency amounts are presented in the supplemental
financial information included with this release, which identifies and
quantifies all excluded items, and provides management’s view of why this
information is useful to investors.
Adjusted Amounts - Excluding Reinvent and Transaction and Deal Related
Activities
The adjusted amounts in this release exclude costs related to Reinvent, VF's
transformation program. Costs, including restructuring charges and
project-related costs, were approximately $41 million in the second quarter of
fiscal 2025 and $59 million in the first six months of fiscal 2025.
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 $0.5
million in the first six months of fiscal 2025.
Combined, the above items negatively impacted earnings per share by $0.08 during
the second quarter of fiscal 2025 and $0.11 during the first six months of
fiscal 2025. All adjusted amounts referenced herein exclude the effects of these
amounts.
Reconciliations of measures calculated in accordance with GAAP to adjusted
amounts are presented in the supplemental financial information included with
this release, which identifies and quantifies all excluded items, and provides
management’s view of why this information is useful to investors. The company
also provides guidance on a non-GAAP basis as we cannot predict certain elements
which are included in reported GAAP results. VF defines free cash flow as cash
flow from operations less capital expenditures and software purchases and
defines net debt as short and long term borrowings less cash and cash
equivalents.
Forward-looking Statements
Certain statements included in this release are "forward-looking statements"
within the meaning of the federal securities laws. Forward-looking statements
are made based on VF's expectations and beliefs concerning future events
impacting VF and therefore involve several risks and uncertainties. You can
identify these statements by the fact that they use words such as “will,”
“anticipate,” "believe," “estimate,” “expect,” “should,” and “may” and other
words and terms of similar meaning or use of future dates, however, the absence
of these words or similar expressions does not mean that a statement is not
forward-looking. All statements regarding VF’s plans, objectives, projections
and expectations relating to VF’s operations or financial performance, and
assumptions related thereto are forward-looking statements. VF cautions that
forward-looking statements are not guarantees and that actual results could
differ materially from those expressed or implied in the forward-looking
statements. VF undertakes no obligation to publicly update or revise any
forward-looking statements, whether as a result of new information, future
events or otherwise, except as required by law. Potential risks and
uncertainties that could cause the actual results of operations or financial
condition of VF to differ materially from those expressed or implied by
forward-looking statements include, but are not limited to: the level of
consumer demand for apparel and footwear; disruption to VF’s distribution
system; changes in global economic conditions and the financial strength of VF’s
consumers and customers, including as a result of current inflationary
pressures; fluctuations in the price, availability and quality of raw materials
and finished products; disruption and volatility in the global capital and
credit markets; VF’s response to changing fashion trends, evolving consumer
preferences and changing patterns of consumer behavior; VF's ability to maintain
the image, health and equity of its brands, including through investment in
brand building and product innovation; intense competition from online retailers
and other direct-to-consumer business risks; increasing pressure on margins;
retail industry changes and challenges; VF's ability to execute its Reinvent
transformation program and other business priorities, including measures to
streamline and right-size its cost base and strengthen the balance sheet while
reducing leverage; VF’s ability to successfully establish a global commercial
organization, and identify and capture efficiencies in its business model; any
inability of VF or third parties on which it relies, to maintain the strength
and security of information technology systems; the fact that VF’s facilities
and systems, and those of third parties on which we rely, are frequent targets
of cyber-attacks of varying levels of severity, and may in the future be
vulnerable to such attacks, and any inability or failure by VF or such third
parties to anticipate or detect data or information security breaches or other
cyber-attacks, including the cyber incident that was reported by VF in December
2023, could result in data or financial loss, reputational harm, business
disruption, damage to our relationships with customers, consumers, employees and
third parties on which it relies, litigation, regulatory investigations,
enforcement actions or other negative impacts; any inability by VF or third
parties on which it relies to properly collect, use, manage and secure business,
consumer and employee data and comply with privacy and security regulations;
VF’s ability to adopt new technologies, including artificial intelligence, in a
competitive and responsible manner; foreign currency fluctuations; stability of
VF's vendors' manufacturing facilities and VF's ability to establish and
maintain effective supply chain capabilities; continued use by VF’s suppliers of
ethical business practices; VF’s ability to accurately forecast demand for
products; actions of activist and other shareholders; VF's ability to recruit,
develop or retain key executive or employee talent or successfully transition
executives; continuity of members of VF’s management; changes in the
availability and cost of labor; VF’s ability to protect trademarks and other
intellectual property rights; possible goodwill and other asset impairment;
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; VF's ability to realize benefits from the completed
sale of the Supreme® brand business; business resiliency in response to natural
or man-made economic, public health, cyber, political or environmental
disruptions; changes in tax laws and additional tax liabilities; legal,
regulatory, political, economic, and geopolitical risks, including those related
to the current conflicts in Ukraine and the Middle East and tensions between the
U.S. and China; changes to laws and regulations; adverse or unexpected weather
conditions, including any potential effects from climate change; VF's
indebtedness and its ability to obtain financing on favorable terms, if needed,
could prevent VF from fulfilling its financial obligations; VF's ability to pay
and declare dividends or repurchase its stock in the future; climate change and
increased focus on environmental, social and governance issues; VF's ability to
execute on its sustainability strategy and achieve its sustainability-related
goals and targets; risks arising from the widespread outbreak of an illness or
any other communicable disease, or any other public health crisis; and tax risks
associated with the spin-off of the 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 September
Six Months Ended September
2024
2023
2024
2023
Net revenues
$
2,757,948
$
2,920,123
$
4,527,008
$
4,888,186
Costs and operating expenses
Cost of goods sold
1,317,391
1,430,194
2,180,773
2,369,828
Selling, general and administrative expenses
1,166,654
1,139,390
2,195,352
2,197,668
Total costs and operating expenses
2,484,045
2,569,584
4,376,125
4,567,496
Operating income
273,903
350,539
150,883
320,690
Interest expense, net
(42,688
)
(41,111
)
(83,635
)
(76,687
)
Other income (expense), net
(660
)
(2,183
)
(2,146
)
(5,826
)
Income from continuing operations before income taxes
230,555
307,245
65,102
238,177
Income tax expense
28,046
758,887
14,620
752,794
Income (loss) from continuing operations
202,509
(451,642
)
50,482
(514,617
)
Income (loss) from discontinued operations, net of tax
(150,331
)
945
(257,190
)
6,495
Net income (loss)
$
52,178
$
(450,697
)
$
(206,708
)
$
(508,122
)
Earnings (loss) per common share - basic (a)
Continuing operations
$
0.52
$
(1.16
)
$
0.13
$
(1.33
)
Discontinued operations
(0.39
)
—
(0.66
)
0.02
Total earnings (loss) per common share - basic
$
0.13
$
(1.16
)
$
(0.53
)
$
(1.31
)
Earnings (loss) per common share - diluted (a)
Continuing operations
$
0.52
$
(1.16
)
$
0.13
$
(1.33
)
Discontinued operations
(0.38
)
—
(0.66
)
0.02
Total earnings (loss) per common share - diluted
$
0.13
$
(1.16
)
$
(0.53
)
$
(1.31
)
Weighted average shares outstanding
Basic
389,044
388,338
388,892
388,249
Diluted
390,945
388,338
390,198
388,249
Cash dividends per common share
$
0.09
$
0.30
$
0.18
$
0.60
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 periods ended September 2024 relate to the 13-week and 26-week
fiscal periods ended September 28, 2024, and all references to periods ended
September 2023 relate to the 13-week and 26-week fiscal periods ended September
30, 2023. References to March 2024 relate to information as of March 30, 2024.
(a) Amounts have been calculated using unrounded numbers.
VF CORPORATION
Condensed Consolidated Balance Sheets
(Unaudited)
(In thousands)
September
March
September
2024
2024
2023
ASSETS
Current assets
Cash and equivalents
$
492,164
$
656,376
$
484,825
Accounts receivable, net
1,820,197
1,263,329
1,881,531
Inventories
2,082,918
1,697,823
2,405,291
Other current assets
472,595
493,194
358,124
Current assets of discontinued operations
1,590,984
116,225
113,791
Total current assets
6,458,858
4,226,947
5,243,562
Property, plant and equipment, net
755,802
788,992
885,882
Goodwill and intangible assets, net
2,426,628
2,421,838
2,924,664
Operating lease right-of-use assets
1,313,030
1,255,074
1,248,524
Other assets
1,265,320
1,210,470
1,143,728
Other assets of discontinued operations
—
1,709,642
1,695,992
Total assets
$
12,219,638
$
11,612,963
$
13,142,352
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Short-term borrowings
$
463,200
$
263,938
$
1,023,276
Current portion of long-term debt
1,750,097
1,000,721
966
Accounts payable
1,134,637
788,477
961,667
Accrued liabilities
1,486,706
1,323,982
1,486,757
Current liabilities of discontinued operations
147,791
79,861
72,167
Total current liabilities
4,982,431
3,456,979
3,544,833
Long-term debt
4,028,549
4,702,284
5,656,725
Operating lease liabilities
1,136,605
1,087,304
1,066,933
Other liabilities
665,686
636,090
598,409
Other liabilities of discontinued operations
—
71,941
65,407
Total liabilities
10,813,271
9,954,598
10,932,307
Stockholders' equity
1,406,367
1,658,365
2,210,045
Total liabilities and stockholders' equity
$
12,219,638
$
11,612,963
$
13,142,352
VF CORPORATION
Condensed Consolidated Statements of Cash Flows
(Unaudited)
(In thousands)
Six Months Ended September
2024
2023
Operating activities
Net loss
$
(206,708
)
$
(508,122
)
Income (loss) from discontinued operations, net of tax
(257,190
)
6,495
Income (loss) from continuing operations, net of tax
50,482
(514,617
)
Depreciation and amortization
126,396
136,936
Reduction in the carrying amount of right-of-use assets
179,206
183,335
Write-off of income tax receivables and interest
—
921,409
Other adjustments, including changes in operating assets and liabilities
(657,907
)
(787,783
)
Cash used by operating activities - continuing operations
(301,823
)
(60,720
)
Cash provided by operating activities - discontinued operations
20,052
41,459
Cash used by operating activities
(281,771
)
(19,261
)
Investing activities
Proceeds from sale of assets
76,683
281
Capital expenditures
(45,953
)
(93,833
)
Software purchases
(25,727
)
(41,150
)
Other, net
(21,424
)
(11,026
)
Cash used by investing activities - continuing operations
(16,421
)
(145,728
)
Cash used by investing activities - discontinued operations
(4,413
)
(4,003
)
Cash used by investing activities
(20,834
)
(149,731
)
Financing activities
Net increase from short-term borrowings and long-term debt
198,711
109,663
Cash dividends paid
(70,048
)
(233,172
)
Proceeds from issuance of Common Stock, net of payments for tax withholdings
(2,689
)
(2,392
)
Cash provided (used) by financing activities
125,974
(125,901
)
Effect of foreign currency rate changes on cash, cash equivalents and restricted
cash
14,304
(21,190
)
Net change in cash, cash equivalents and restricted cash
(162,327
)
(316,083
)
Cash, cash equivalents and restricted cash – beginning of year
676,957
816,319
Cash, cash equivalents and restricted cash – end of period
$
514,630
$
500,236
VF CORPORATION
Supplemental Financial Information
Reportable Segment Information
(Unaudited)
Three Months Ended September
% Change
% Change
Constant
Currency (a)
2024
2023
Segment revenues
Outdoor
$
1,658,672
$
1,713,679
(3)%
(4)%
Active
879,767
968,171
(9)%
(9)%
Work
219,509
238,273
(8)%
(8)%
Total segment revenues
$
2,757,948
$
2,920,123
(6)%
(6)%
Segment profit
Outdoor
$
287,414
$
296,750
Active
103,659
121,189
Work
20,408
8,515
Total segment profit
411,481
426,454
Corporate and other expenses
(138,238
)
(78,098
)
Interest expense, net
(42,688
)
(41,111
)
Income from continuing operations before income taxes
$
230,555
$
307,245
(a) Refer to constant currency definition on the following pages.
VF CORPORATION
Supplemental Financial Information
Reportable Segment Information
(Unaudited)
(In thousands)
Six Months Ended September
% Change
% Change
Constant
Currency (a)
2024
2023
Segment revenues
Outdoor
$
2,448,871
$
2,543,376
(4)%
(4)%
Active
1,683,665
1,915,907
(12)%
(12)%
Work
394,472
428,903
(8)%
(8)%
Total segment revenues
$
4,527,008
$
4,888,186
(7)%
(7)%
Segment profit
Outdoor
$
203,999
$
253,089
Active
172,759
222,324
Work
25,736
15,346
Total segment profit
402,494
490,759
Corporate and other expenses
(253,757
)
(175,895
)
Interest expense, net
(83,635
)
(76,687
)
Income from continuing operations before income taxes
$
65,102
$
238,177
(a) Refer to constant currency definition on the following pages.
VF CORPORATION
Supplemental Financial Information
Reportable Segment Information – Constant Currency Basis
(Unaudited)
(In thousands)
Three Months Ended September 2024
As Reported
Adjust for Foreign
under GAAP
Currency Exchange
Constant Currency
Segment revenues
Outdoor
$
1,658,672
$
(10,924
)
$
1,647,748
Active
879,767
(576
)
879,191
Work
219,509
(44
)
219,465
Total segment revenues
$
2,757,948
$
(11,544
)
$
2,746,404
Segment profit
Outdoor
$
287,414
$
(4,332
)
$
283,082
Active
103,659
(681
)
102,978
Work
20,408
(51
)
20,357
Total segment profit
411,481
(5,064
)
406,417
Corporate and other expenses
(138,238
)
(103
)
(138,341
)
Interest expense, net
(42,688
)
—
(42,688
)
Income from continuing operations before income taxes
$
230,555
$
(5,167
)
$
225,388
Diluted earnings per share growth from continuing operations
145
%
(1
)%
144
%
Constant Currency Financial Information
VF is a global company that reports financial information in U.S. dollars in
accordance with GAAP. Foreign currency exchange rate fluctuations affect the
amounts reported by VF from translating its foreign revenues and expenses into
U.S. dollars. These rate fluctuations can have a significant effect on reported
operating results. As a supplement to our reported operating results, we present
constant currency financial information, which is a non-GAAP financial measure
that excludes the impact of translating foreign currencies into U.S. dollars. We
use constant currency information to provide a framework to assess how our
business performed excluding the effects of changes in the rates used to
calculate foreign currency translation. Management believes this information is
useful to investors to facilitate comparison of operating results and better
identify trends in our businesses.
To calculate foreign currency translation on a constant currency basis,
operating results for the current year period for entities reporting in
currencies other than the U.S. dollar are translated into U.S. dollars at the
average exchange rates in effect during the comparable period of the prior year
(rather than the actual exchange rates in effect during the current year
period).
These constant currency performance measures should be viewed in addition to,
and not in lieu of or superior to, our operating performance measures calculated
in accordance with GAAP. The constant currency information presented may not be
comparable to similarly titled measures reported by other companies.
VF CORPORATION
Supplemental Financial Information
Reportable Segment Information – Constant Currency Basis
(Unaudited)
(In thousands)
Six Months Ended September 2024
As Reported
Adjust for Foreign
under GAAP
Currency Exchange
Constant Currency
Segment revenues
Outdoor
$
2,448,871
$
(4,236
)
$
2,444,635
Active
1,683,665
2,966
1,686,631
Work
394,472
839
395,311
Total segment revenues
$
4,527,008
$
(431
)
$
4,526,577
Segment profit
Outdoor
$
203,999
$
(3,544
)
$
200,455
Active
172,759
(462
)
172,297
Work
25,736
(81
)
25,655
Total segment profit
402,494
(4,087
)
398,407
Corporate and other expenses
(253,757
)
(814
)
(254,571
)
Interest expense, net
(83,635
)
—
(83,635
)
Income from continuing operations before income taxes
$
65,102
$
(4,901
)
$
60,201
Diluted earnings per share growth from continuing operations
110
%
(1
)%
109
%
Constant Currency Financial Information
VF is a global company that reports financial information in U.S. dollars in
accordance with GAAP. Foreign currency exchange rate fluctuations affect the
amounts reported by VF from translating its foreign revenues and expenses into
U.S. dollars. These rate fluctuations can have a significant effect on reported
operating results. As a supplement to our reported operating results, we present
constant currency financial information, which is a non-GAAP financial measure
that excludes the impact of translating foreign currencies into U.S. dollars. We
use constant currency information to provide a framework to assess how our
business performed excluding the effects of changes in the rates used to
calculate foreign currency translation. Management believes this information is
useful to investors to facilitate comparison of operating results and better
identify trends in our businesses.
To calculate foreign currency translation on a constant currency basis,
operating results for the current year period for entities reporting in
currencies other than the U.S. dollar are translated into U.S. dollars at the
average exchange rates in effect during the comparable period of the prior year
(rather than the actual exchange rates in effect during the current year
period).
These constant currency performance measures should be viewed in addition to,
and not in lieu of or superior to, our operating performance measures calculated
in accordance with GAAP. The constant currency information presented may not be
comparable to similarly titled measures reported by other companies.
VF CORPORATION
Supplemental Financial Information
Reconciliation of Select GAAP Measures to Non-GAAP Measures - Three and Six
Months Ended September 2024
(Unaudited)
(In thousands, except per share amounts)
Three Months Ended September 2024
As Reported
under GAAP
Reinvent (a)
Transaction and
Deal Related
Activities (b)
Adjusted
Revenues
$
2,757,948
$
—
$
—
$
2,757,948
Gross profit
1,440,557
—
—
1,440,557
Percent
52.2
%
52.2
%
Operating income
273,903
41,279
—
315,182
Percent
9.9
%
11.4
%
Diluted earnings per share from continuing operations (c)
0.52
0.08
—
0.60
Six Months Ended September 2024
As Reported
under GAAP
Reinvent (a)
Transaction and
Deal Related
Activities (b)
Adjusted
Revenues
$
4,527,008
$
—
$
—
$
4,527,008
Gross profit
2,346,235
412
—
2,346,647
Percent
51.8
%
51.8
%
Operating income
150,883
59,128
490
210,501
Percent
3.3
%
4.6
%
Diluted earnings per share from continuing operations (c)
0.13
0.11
—
0.24
(a) Costs related to Reinvent, VF's transformation program, including
restructuring charges and project-related costs, were $41.3 million and $59.1
million in the three and six months ended September 2024, respectively. These
costs related primarily to severance and employee-related benefits and expenses
related to the engagement of a consulting firm to support VF's transformation
journey. VF entered into a contract with a consulting firm during the three
months ended September 2024, with services under the contract expected to be
substantially complete by the third quarter of Fiscal 2026. In addition to
payment for services, the contract includes contingent fees tied to increases in
VF's stock price through June 2027. Expenses related to the contract, including
contingent fees, were $28.1 million and $31.1 million in the three and six
months ended September 2024, respectively. Reinvent resulted in a net tax
benefit of $10.5 million and $14.7 million in the three and six months ended
September 2024, respectively.
The Company currently estimates that it will incur approximately $190.0 million
to $210.0 million in restructuring charges in connection with Reinvent, and that
substantially all actions will be completed by the end of Fiscal 2025.
Cumulative restructuring charges incurred through Q2 of Fiscal 2025 were
approximately $134.1 million. Total fees associated with the contract with the
consulting firm could be up to $135.0 million, with $75.0 million of the fees
contingent on increases to VF’s stock price through June 2027.
(b) 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 $0.5 million for
the six months ended September 2024. The transaction and deal related activities
resulted in a net tax benefit of $0.1 million in the six months ended September
2024.
(c) Amounts shown in the table have been calculated using unrounded numbers. The
diluted earnings per share impacts were calculated using 390,945,000 and
390,198,000 weighted average common shares for the three and six months ended
September 2024, respectively.
Non-GAAP Financial Information
The financial information above has been presented on a GAAP basis and on an
adjusted basis, which excludes the impact of Reinvent and 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 and Six
Months Ended September 2023
(Unaudited)
(In thousands, except per share amounts)
Three Months Ended September 2023
As Reported
under GAAP
Transaction and
Deal Related
Activities (a)
Tax Items (b)
Adjusted
Revenues
$
2,920,123
$
—
$
—
$
2,920,123
Gross profit
1,489,929
—
—
1,489,929
Percent
51.0
%
51.0
%
Operating income
350,539
328
—
350,867
Percent
12.0
%
12.0
%
Diluted earnings (loss) per share from continuing operations (c)
(1.16
)
—
1.79
0.63
Six Months Ended September 2023
As Reported
under GAAP
Transaction and
Deal Related
Activities (a)
Tax Items (b)
Adjusted
Revenues
$
4,888,186
$
—
$
—
$
4,888,186
Gross profit
2,518,358
—
—
2,518,358
Percent
51.5
%
51.5
%
Operating income
320,690
1,446
—
322,136
Percent
6.6
%
6.6
%
Diluted earnings (loss) per share from continuing operations (c)
(1.33
)
—
1.79
0.47
(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 $0.3 million and
$1.4 million for the three and six months ended September 2023, respectively.
The transaction and deal related activities resulted in a net tax benefit of
$0.1 million and $0.4 million in the three and six months ended September 2023,
respectively.
(b) Tax items include the impact to tax expense resulting from the decision by
the U.S. Court of Appeals for the First Circuit on September 8, 2023 that upheld
the U.S. Tax Court’s decision in favor of the Internal Revenue Service regarding
the timing of income inclusion associated with VF’s acquisition of The
Timberland Company in September 2011. The net impact to tax expense was an
increase of approximately $670.3 million in the three and six months ended
September 2023, excluding the reversal of accrued interest income, as a result
of this decision. Tax items also include the impact to tax expense resulting
from the decision by the General Court on September 20, 2023 that confirmed the
decision of the European Union that Belgium’s excess profit tax regime amounted
to illegal State aid. The net impact to tax expense was an increase of
approximately $26.1 million in the three and six months ended September 2023, as
a result of this ruling.
(c) Amounts shown in the table have been calculated using unrounded numbers. The
GAAP diluted loss per share was calculated using 388,338,000 and 388,249,000
weighted average common shares for the three and six months ended September
2023, respectively. The adjusted diluted earnings per share impacts were
calculated using 389,487,000 and 389,181,000 weighted average common shares for
the three and six months ended September 2023, respectively.
Non-GAAP Financial Information
The financial information above has been presented on a GAAP basis and on an
adjusted basis, which excludes the impact of transaction and deal related
activities and certain tax items. The adjusted presentation provides non-GAAP
measures. Management believes these measures provide investors with useful
supplemental information regarding VF's underlying business trends and the
performance of VF's ongoing operations and are useful for period-over-period
comparisons of such operations.
Management uses the above financial measures internally in its budgeting and
review process and, in some cases, as a factor in determining compensation.
While management believes that these non-GAAP financial measures are useful in
evaluating the business, this information should be considered as supplemental
in nature and should be viewed in addition to, and not in lieu of or superior
to, VF's operating performance measures calculated in accordance with GAAP. In
addition, these non-GAAP financial measures may not be the same as similarly
titled measures presented by other companies.
VF CORPORATION
Supplemental Financial Information
Top 4 Brand Revenue Information
(Unaudited)
Three Months Ended September 2024
Six Months Ended September 2024
Top 4 Brand Revenue Growth
Americas
EMEA
APAC
Global
Americas
EMEA
APAC
Global
The North Face®
% change
(14)%
0%
20%
(3)%
(13)%
(2)%
23%
(3)%
% change constant currency*
(13)%
(2)%
19%
(4)%
(12)%
(4)%
24%
(3)%
Vans®
% change
(10)%
(7)%
(27)%
(11)%
(18)%
(5)%
(28)%
(16)%
% change constant currency*
(9)%
(8)%
(26)%
(11)%
(17)%
(6)%
(27)%
(16)%
Timberland®
% change
(4)%
(3)%
3%
(3)%
(2)%
(7)%
(8)%
(5)%
% change constant currency*
(3)%
(5)%
3%
(3)%
(1)%
(8)%
(7)%
(5)%
Dickies®
% change
(14)%
2%
(16)%
(11)%
(14)%
0%
(25)%
(13)%
% change constant currency*
(14)%
1%
(15)%
(11)%
(14)%
0%
(23)%
(12)%
*Refer to constant currency definition on previous pages.
VF CORPORATION
Supplemental Financial Information
Geographic and Channel Revenue Information
(Unaudited)
Three Months Ended September 2024
Six Months Ended September 2024
% Change
% Change
Constant
Currency*
% Change
% Change
Constant
Currency*
Geographic Revenue Growth
Americas
(10)%
(9)%
(11)%
(11)%
EMEA
(3)%
(5)%
(4)%
(5)%
APAC
6%
5%
0%
1%
Greater China
10%
9%
5%
6%
International
(2)%
(3)%
(4)%
(4)%
Global
(6)%
(6)%
(7)%
(7)%
Three Months Ended September 2024
Six Months Ended September 2024
% Change
% Change
Constant
Currency*
% Change
% Change
Constant
Currency*
Channel Revenue Growth
Wholesale (a)
(4)%
(5)%
(5)%
(6)%
Direct-to-consumer
(8)%
(8)%
(11)%
(10)%
Digital
(5)%
(5)%
(7)%
(7)%
As of September
2024
2023
DTC Store Count
Total
1,160
1,235
*Refer to constant currency definition on previous pages.
(a) Royalty revenues are included in the wholesale channel for all periods.
View source version on businesswire.com:
https://www.businesswire.com/news/home/20241028757895/en/
Investor Contact:
Allegra Perry
ir@vfc.com
Media Contact:
Colin Wheeler
corporate_communications@vfc.com
Source: VF Corporation
Released October 28, 2024
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