08/06/2024 | Press release | Distributed by Public on 08/06/2024 14:13
Three Months Ended June | ||||||||
(Dollars in millions) | 2024 | 2023 | % Change | % Change (constant currency) | ||||
Brand: | ||||||||
The North Face®
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$ | 524.2 | $ | 538.2 | (3) | % | (2) | % |
Vans®
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581.8 | 737.5 | (21) | % | (21) | % | ||
Timberland®
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229.4 | 253.8 | (10) | % | (9) | % | ||
Dickies®
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116.8 | 136.6 | (15) | % | (14) | % | ||
Other Brands | 455.0 | 420.2 | 8 | % | 10 | % | ||
VF Revenue | $ | 1,907.3 | $ | 2,086.3 | (9) | % | (8) | % |
Region: | ||||||||
Americas | $ | 1,044.8 | $ | 1,183.8 | (12) | % | (12) | % |
EMEA | 552.9 | 584.3 | (5) | % | (5) | % | ||
APAC | 309.7 | 318.2 | (3) | % | 2 | % | ||
VF Revenue | $ | 1,907.3 | $ | 2,086.3 | (9) | % | (8) | % |
International | $ | 978.9 | $ | 1,026.7 | (5) | % | (3) | % |
Channel: | ||||||||
DTC | $ | 879.2 | $ | 973.6 | (10) | % | (9) | % |
Wholesale (a)
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1,028.1 | 1,112.7 | (8) | % | (7) | % | ||
VF Revenue | $ | 1,907.3 | $ | 2,086.3 | (9) | % | (8) | % |
All references to the three months ended June 2024 relate to the 13-week fiscal period ended June 29, 2024 and all references to the three months ended June 2023 relate to the 13-week fiscal period ended July 1, 2023.
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Note: Amounts may not sum due to rounding | ||||||||
(a) Royalty revenues are included in the wholesale channel for all periods.
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Three Months Ended June | ||||
2024 | 2023 | |||
Net revenues | $ | 1,907,301 | $ | 2,086,336 |
Costs and operating expenses | ||||
Cost of goods sold | 915,643 | 985,269 | ||
Selling, general and administrative expenses | 1,086,551 | 1,110,059 | ||
Impairment of goodwill and intangible assets | 145,000 | - | ||
Total costs and operating expenses | 2,147,194 | 2,095,328 | ||
Operating loss | (239,893) | (8,992) | ||
Interest expense, net | (55,677) | (49,719) | ||
Other income (expense), net | (1,950) | (3,567) | ||
Loss before income taxes | (297,520) | (62,278) | ||
Income tax benefit | (38,634) | (4,853) | ||
Net loss | $ | (258,886) | $ | (57,425) |
Net loss per common share (a)
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Basic | $ | (0.67) | $ | (0.15) |
Diluted | $ | (0.67) | $ | (0.15) |
Weighted average shares outstanding | ||||
Basic | 388,741 | 388,160 | ||
Diluted | 388,741 | 388,160 | ||
Cash dividends per common share | $ | 0.09 | $ | 0.30 |
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 2024 and June 2023 relate to the 13-week fiscal period ended June 29, 2024 and the 13-week fiscal period ended July 1, 2023, respectively. References to March 2024 relate to information as of March 30, 2024.
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(a) Amounts have been calculated using unrounded numbers.
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June | March | June | ||||
2024 | 2024 | 2023 | ||||
ASSETS | ||||||
Current assets | ||||||
Cash and equivalents | $ | 637,420 | $ | 674,605 | $ | 806,529 |
Accounts receivable, net | 1,055,571 | 1,273,965 | 1,214,223 | |||
Inventories | 2,110,598 | 1,766,366 | 2,787,021 | |||
Other current assets | 545,542 | 512,011 | 405,784 | |||
Total current assets | 4,349,131 | 4,226,947 | 5,213,557 | |||
Property, plant and equipment, net | 794,212 | 823,886 | 943,163 | |||
Goodwill and intangible assets, net | 3,932,547 | 4,088,896 | 4,614,442 | |||
Operating lease right-of-use assets | 1,332,950 | 1,330,361 | 1,349,725 | |||
Other assets | 1,132,523 | 1,142,873 | 1,923,011 | |||
Total assets | $ | 11,541,363 | $ | 11,612,963 | $ | 14,043,898 |
LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||
Current liabilities | ||||||
Short-term borrowings | $ | 263,709 | $ | 263,938 | $ | 58,520 |
Current portion of long-term debt | 1,749,601 | 1,000,721 | 928,736 | |||
Accounts payable | 1,157,755 | 817,128 | 1,282,313 | |||
Accrued liabilities | 1,237,909 | 1,375,192 | 1,546,866 | |||
Total current liabilities | 4,408,974 | 3,456,979 | 3,816,435 | |||
Long-term debt | 3,940,668 | 4,702,284 | 5,722,448 | |||
Operating lease liabilities | 1,167,415 | 1,156,858 | 1,155,852 | |||
Other liabilities | 636,401 | 638,477 | 632,400 | |||
Total liabilities | 10,153,458 | 9,954,598 | 11,327,135 | |||
Stockholders' equity | 1,387,905 | 1,658,365 | 2,716,763 | |||
Total liabilities and stockholders' equity | $ | 11,541,363 | $ | 11,612,963 | $ | 14,043,898 |
Three Months Ended June | ||||
2024 | 2023 | |||
Operating activities | ||||
Net loss | $ | (258,886) | $ | (57,425) |
Impairment of goodwill and intangible assets | 145,000 | - | ||
Depreciation and amortization | 67,781 | 67,075 | ||
Reduction in the carrying amount of right-of-use assets | 92,495 | 95,728 | ||
Other adjustments, including changes in operating assets and liabilities | (26,560) | 58,197 | ||
Cash provided by operating activities | 19,830 | 163,575 | ||
Investing activities | ||||
Proceeds from sale of assets | 45,596 | 1,170 | ||
Capital expenditures | (25,187) | (61,763) | ||
Software purchases | (16,106) | (22,827) | ||
Other, net | (15,364) | (7,142) | ||
Cash used by investing activities | (11,061) | (90,562) | ||
Financing activities | ||||
Net increase (decrease) from short-term borrowings and long-term debt | (505) | 46,415 | ||
Cash dividends paid | (35,015) | (116,575) | ||
Proceeds from issuance of Common Stock, net of payments for tax withholdings | (1,924) | (1,725) | ||
Cash used by financing activities | (37,444) | (71,885) | ||
Effect of foreign currency rate changes on cash, cash equivalents and restricted cash | (8,340) | (9,326) | ||
Net change in cash, cash equivalents and restricted cash | (37,015) | (8,198) | ||
Cash, cash equivalents and restricted cash - beginning of year | 676,957 | 816,319 | ||
Cash, cash equivalents and restricted cash - end of period | $ | 639,942 | $ | 808,121 |
Three Months Ended June | % Change |
% Change Constant Currency (a)
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2024 | 2023 | |||||
Segment revenues | ||||||
Outdoor | $ | 790,199 | $ | 829,697 | (5)% | (4)% |
Active | 942,139 | 1,066,009 | (12)% | (11)% | ||
Work | 174,963 | 190,630 | (8)% | (8)% | ||
Total segment revenues | $ | 1,907,301 | $ | 2,086,336 | (9)% | (8)% |
Segment profit (loss) | ||||||
Outdoor | $ | (83,415) | $ | (43,661) | ||
Active | 98,549 | 123,782 | ||||
Work | 5,328 | 6,831 | ||||
Total segment profit | 20,462 | 86,952 | ||||
Impairment of goodwill and intangible assets | (145,000) | - | ||||
Corporate and other expenses | (117,305) | (99,511) | ||||
Interest expense, net | (55,677) | (49,719) | ||||
Loss before income taxes
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$ | (297,520) | $ | (62,278) | ||
(a) Refer to constant currency definition on the following pages.
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Three Months Ended June 2024 | ||||||
As Reported | Adjust for Foreign | |||||
under GAAP | Currency Exchange | Constant Currency | ||||
Segment revenues | ||||||
Outdoor | $ | 790,199 | $ | 6,688 | $ | 796,887 |
Active | 942,139 | 8,682 | 950,821 | |||
Work | 174,963 | 883 | 175,846 | |||
Total segment revenues | $ | 1,907,301 | $ | 16,253 | $ | 1,923,554 |
Segment profit (loss) | ||||||
Outdoor | $ | (83,415) | $ | 788 | $ | (82,627) |
Active | 98,549 | 2,918 | 101,467 | |||
Work | 5,328 | (30) | 5,298 | |||
Total segment profit | 20,462 | 3,676 | 24,138 | |||
Impairment of goodwill and intangible assets | (145,000) | - | (145,000) | |||
Corporate and other expenses | (117,305) | (711) | (118,016) | |||
Interest expense, net | (55,677) | - | (55,677) | |||
Loss before income taxes | $ | (297,520) | $ | 2,965 | $ | (294,555) |
Diluted net loss per share growth | (350) | % | 4 | % | (346) | % |
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. |
Three Months Ended June 2024 |
As Reported under GAAP |
Reinvent (a)
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Impairment Charges (b)
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Transaction and Deal Related Activities (c)
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Adjusted | |||||
Revenues | $ | 1,907,301 | $ | - | $ | - | $ | - | $ | 1,907,301 |
Gross profit | 991,658 | 412 | - | - | 992,070 | |||||
Percent | 52.0 | % | 52.0 | % | ||||||
Operating loss | (239,893) | 17,849 | 145,000 | 490 | (76,554) | |||||
Percent | (12.6) | % | (4.0) | % | ||||||
Diluted loss per share (d)
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(0.67) | 0.04 | 0.30 | - | (0.33) | |||||
(a) Costs related to Reinvent, VF's transformation program, including exit costs and project-related costs, were $17.8 million in the three months ended June 2024. These costs related primarily to severance and employee-related benefits. Reinvent resulted in a net tax benefit of $4.1 million in the three months ended June 2024.
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(b) VF recognized noncash impairment charges related to the Supreme reporting unit goodwill and indefinite-lived trademark intangible asset of $145.0 million during the three months ended June 2024. The goodwill impairment charge related to the estimates of fair value subsequently confirmed by the transaction price in the definitive agreement for EssilorLuxottica to acquire the Supreme® brand business signed on July 16, 2024, and the indefinite-lived trademark intangible asset impairment charge related to an increase in the market-based discount rate applied. The impairment charges resulted in a net tax benefit of $27.9 million in the three months ended June 2024.
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(c) 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 three months ended June 2024. The transaction and deal related activities resulted in a net tax benefit of $0.1 million in the three months ended June 2024.
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(d) Amounts shown in the table have been calculated using unrounded numbers. The diluted loss per share impacts were calculated using 388,741,000 weighted average common shares for the three months ended June 2024.
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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, impairment charges 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. |
Three Months Ended June 2023 |
As Reported under GAAP |
Transaction and Deal Related Activities (a)
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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 loss per share (b)
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(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.
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(b) Amounts shown in the table have been calculated using unrounded numbers. The diluted loss per share impacts were calculated using 388,160,000 weighted average common shares for the three months ended June 2023.
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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. |
Three Months Ended June 2024 | ||||
Top 4 Brand Revenue Growth | Americas | EMEA | APAC | Global |
The North Face®
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% change | (10)% | (6)% | 30% | (3)% |
% change constant currency* | (10)% | (6)% | 35% | (2)% |
Vans®
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% change | (25)% | (3)% | (29)% | (21)% |
% change constant currency* | (25)% | (3)% | (27)% | (21)% |
Timberland®
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% change | 2% | (16)% | (25)% | (10)% |
% change constant currency* | 2% | (15)% | (21)% | (9)% |
Dickies®
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% change | (13)% | (3)% | (35)% | (15)% |
% change constant currency* | (13)% | (2)% | (32)% | (14)% |
*Refer to constant currency definition on previous pages. |
Three Months Ended June 2024 | ||
% Change | % Change Constant Currency* | |
Geographic Revenue Growth | ||
Americas | (12)% | (12)% |
EMEA | (5)% | (5)% |
APAC | (3)% | 2% |
Greater China | 0% | 4% |
International | (5)% | (3)% |
Global | (9)% | (8)% |
Three Months Ended June 2024 | ||
% Change | % Change Constant Currency* | |
Channel Revenue Growth | ||
Wholesale (a)
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(8)% | (7)% |
Direct-to-consumer | (10)% | (9)% |
Digital | (5)% | (4)% |
As of June | ||
2024 | 2023 | |
DTC Store Count | ||
Total | 1,175 | 1,250 |
*Refer to constant currency definition on previous pages. | ||
(a) Royalty revenues are included in the wholesale channel for all periods.
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