V.F. Corporation · NYSE:VFC
V.F — Q4 FY2023 Earnings Presentation
34 slides from V.F's earnings presentation, May 23, 2023
Slide 1: Q4'FY23 Earnings
Q4’FY23 EARNINGS M AY 2 3 , 2 0 2 3 Internal Use
Slide 2: Safe Harbor Statement
Safe Harbor Statement Certain statements included in this presentation are "forward-looking statements" w ithin the meaning of the federal securities law s. Forward-looking statements are made based on our expectations and beliefs concerning future events impacting VF and therefore involve several r
Slide 3: GAAP to Non-GAAP
GAAP to Non-GAAP All numbers and information presented are on a continuing operations basis, and thus exclude the Occupational Workwear busine ss. Additionally, quarter-to-date and full-year period numbers noted on an "adjusted" basis exclude noncash impairment charges. The full-year period numbers
Slide 4: Benno Dorer, Interim President & CEO
BENNO DORER INT E RIM P RE S ID ENT & C E O Internal Use
Slide 5: Emerging from FY23 with clear view on priorities
Emerging from FY23 with clear view on priorities Progress underway in key focus areas, despite ongoing challenges Confident in VF’s value proposition and returning to profitable growth and long- term value creation FY24 will be a year of progress Q4 performance in-line with guidance, with turnaround
Slide 6: Q4 in line with guidance, reflecting initial progress against operational initiatives
Q4 in line with guidance, reflecting initial progress against operational initiatives Q4 REVENUE FLAT ▪ Continued momentum in Outdoor brands – Global The North Face +16% – Global Outdoor Emerging Brands +12% ▪ Sequential improvement in Dickies and stabilization in Supreme ▪ EMEA strength continued w
Slide 7: Supply chain execution improvements underway
Supply chain execution improvements underway Ahead of plan to restore customer serv ice excellence ▪ Actions to improve execution underway ▪ Inventory reduction of ~$300 million achieved in Q4 ▪ Environment is normalizing ▪ Actions to improve service levels are working, with on-time performance grea
Slide 8: Vans turnaround on track with work ahead in FY24
Vans turnaround on track with work ahead in FY24 Expect brand to return to growth during H2 after a challenging H1 ▪ Projects are on track ▪ Leaning into growing product platforms, while increasing investment in newness ▪ Consumer insight project underway ▪ Simplifying store layout and merchandising
Slide 9: Continued strong execution at The North Face
Continued strong execution at The North Face Leading Outdoor performance with the brand +16% in Q4 ▪ Broad-based growth across regions and channels ▪ Purpose-led consumer engagement across geographies ▪ Iconic products with pinnacle performance and broad consumer appeal ▪ Increasing brand investment
Slide 10: APAC acceleration driven by China momentum
APAC acceleration driven by China momentum Long runway for growth ahead giv en VF’s light penetration ▪ Greater China saw increasing momentum throughout the year with Q4 revenue +10% in C$ ▪ We are currently investing and will continue to invest into the momentum ▪ APAC and Greater China revenue ant
Slide 11: Reinforced value proposition
Reinforced value proposition Lev eraging distinctiv e business model to generate v alue Portfolio of iconic, Disciplined and Clear path to deeply loved brands dynamic capital accelerate return to in profitable and allocators with near- profitable growth growing spaces with term focus on while contin
Slide 12: VF is well-positioned to return to strong long-term shareholder value creation
VF is well-positioned to return to strong long-term shareholder value creation Profitable and sustainable growth, expanding margins and generating cash flow Investing in highest growth and return initiatives Implementing a more systematic and cross-functional cost savings plan Setting the stage for
Slide 13: Matt Puckett, EVP, CFO
MATT PUCKETT E V P, C F O Internal Use
Slide 14: FY23 Financial Overview
FY23 Financial Overview Expanded C$ rev enue, albeit a difficult year T O T AL R E VE N U E ( $ M ) ▪ Revenue of $11.6B, -2%/+3% C$ – In-line with guidance $11,842 $11,612 – Wholesale and DTC growing – The North Face and International key drivers +3% C$ ▪ Adjusted Gross Margin of 52.6%, -220bps ▪ Ad
Slide 15: Q4'FY23 Financial Overview
Q4’FY23 Financial Overview Quarter reported in-line with guidance T O T AL R E VE N U E ( $ M ) ▪ Revenue of $2.7B, -3%/flat C$ – International +8% $2,825 $2,740 flat C$ ▪ Adjusted Gross Margin of 49.6%, -260bps ▪ Adjusted Operating Margin of 5.6%, -230bps ▪ Adjusted Diluted EPS of $0.17 (Q4'FY22 $0
Slide 16: Continued strong execution in EMEA with sequential improvement in APAC
Continued strong execution in EMEA with sequential improvement in APAC / Greater China in Q4’FY23 Americas reflects wholesale challenges and softer results at Vans +2% / +8% C$ EMEA -7% / -7% C$ AMERICAS +3% / +10% C$ APAC 16 Q 4 F I S C AL 2 0 2 3
Slide 17: Gross Margin Bridge – Q4'FY23 vs. Q4'FY22
Gross Margin Bridge – Q4’FY23 vs. Q4’FY22 Affected by continued promotional activ ity from right-sizing inv entory lev els and higher product costs; partially offset by mix +60 bps -310 bps -10 bps Note: Gross Margin on an adjusted basis 17 * Reflects the impact of FX translation only Q 4 F I S C AL
Slide 18: Operating Margin Bridge – Q4'FY23 vs. Q4'FY22
Operating Margin Bridge – Q4’FY23 vs. Q4’FY22 Impacted by Gross Margin decline, partially offset by expense management +50 bps -250 bps -30 bps Note: Operating Margin on an adjusted basis *Numbers on an adjusted basis, excluding FX 18 ** Reflects the impact of FX translation only Q 4 F I S C AL 2 0
Slide 19: Supply chain on track to return to excellence
Supply chain on track to return to excellence Aggressiv e actions leading to improv ing results now and benefits into FY24 Q4’FY23 ACTIONS AND MOVING INTO FY24 RESULTS ▪ Sharpened planning and ▪ More stabilized operating coordination amongst brand environment with a return to pre- operations, sales
Slide 20: FY24 Outlook: A year of progress
FY24 Outlook: A year of progress Improv ing profitability and strong cash generation INITIAL EXPECTATION* GUIDANCE Revenue (C$) + LSD% flat to up slightly % Gross margin Expansion at least +100bps Operating margin Expansion** Expansion EPS $2.05 to $2.25 Free cash flow*** ~$900M *Issued with Q3’FY23
Slide 21: Laser-focused on operational execution in FY24
Laser-focused on operational execution in FY24 while continuing to advance strategic priorities Improved operating performance and financial results Expanding gross margins, EBITDA growth and strong cash generation supports path towards deleverage Well-positioned to deliver long-term, sustainable an
Slide 22: Appendix
APPENDIX 22
Slide 23: FY23: Revenue Breakdown
FY23: Revenue Breakdown BIG 4 BRANDS -3% (+2% C$): ▪ Vans® -12% (-8% C$) TOTAL ▪ ▪ The North Face ® +11% (+17% C$) Timb erland ® -2% (+4% C$) ▪ Dickies® -13% (-11% C$) $11,612 M REVENUE INTERNATIONAL -2% (+8% C$) -2% Reported +3% C$ ▪ APAC -7% (+1% C$), including Greater China -14% (-7% C$) and Main
Slide 24: Q4'FY23: Revenue Breakdown
Q4’FY23: Revenue Breakdown BIG 4 BRANDS -4% (-1% C$): ▪ Vans® -14% (-12% C$) TOTAL ▪ ▪ The North Face ® +12% (+16% C$) Timb erland ® -9% (-6% C$) ▪ Dickies® -3% (flat C$) $2,740 M REVENUE INTERNATIONAL +2% (+8% C$) -3% Reported flat C$ ▪ APAC +3% (+10% C$), including Greater China +3% (+10% C$) and
Slide 25: Vans Global Performance
Q 4 ’F Y 2 3 Vans ® Global Performance REVENUE OF $857 MILLION, -14% VS PRIOR YEAR (-12% C$) ▪ Global performance primarily driven by softer traffic in the Americas, while APAC returned to C$ growth after easing of COVID restrictions ▪ Wholesale decline as partners reduced orders to right-size eleva
Slide 26: The North Face Global Performance
Q 4 ’F Y 2 3 The North Face ® Global Performance REVENUE OF $860 MILLION, +12% VS PRIOR YEAR (+16% C$) ▪ Continued momentum with strong performance across all regions and global channels ▪ Global DTC growth driven by strong double-digit growth online and in stores ▪ Strong double-digit growth in EME
Slide 27: Timberland Global Performance
Q 4 ’F Y 2 3 Timberland ® Global Performance REVENUE OF $396 MILLION, -9% VS PRIOR YEAR (-6% C$) ▪ Global revenue decline driven by Americas & APAC Wholesale due to elevated inventory levels, partially offset by strong resul ts in PRO® in the Americas ▪ Timberland PRO® posted the largest volume qua
Slide 28: Dickies Global Performance
Q 4 ’F Y 2 3 Dickies ® Global Performance REVENUE OF $191 MILLION, -3% VS PRIOR YEAR (flat C$) ▪ Sequential improvement in performance after three consecutive quarters of global revenue declines ▪ Americas continued to be impacted by key account inventory actions, but seeing improved consumer acti
Slide 29: Gross Margin Bridge – FY23 vs. FY22
Gross Margin Bridge – FY23 vs. FY22 0 bps -200 bps -20 bps Note: Gross Margin on an adjusted basis 29 * Reflects the impact of FX translation only Q 4 F I S C AL 2 0 2 3
Slide 30: Operating Margin Bridge – FY23 vs. FY22
Operating Margin Bridge – FY23 vs. FY22 -200 bps -90 bps -40 bps Note: Operating Margin on an adjusted basis *Numbers on an adjusted basis, excluding FX 30 ** Reflects the impact of FX translation only Q 4 F I S C AL 2 0 2 3
Slide 31: Appendix: GAAP to Non-GAAP
Appendix: GAAP to Non-GAAP VF CORPORATION Supplemental Financial Information Reconciliation of Select GAAP Measures to Non-GAAP Measures - Three and Twelve Months Ended March 2023 (Unaudited) (In thousands, except per share amounts) As Reported Transaction and Deal Specified Strategic Impairments an
Slide 32: Appendix: GAAP to Non-GAAP
Appendix: GAAP to Non-GAAP 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) As Reported Transaction and Deal Specified Strategic Business (a) (
Slide 33: Appendix: Top 4 Brand Revenue
Appendix: Top 4 Brand Revenue VF CORPORATION Supplemental Financial Information Top 4 Brand Revenue Information (Unaudited) Three Months Ended March 2023 Twelve Months Ended March 2023 Top 4 Brand Revenue Growth Americas EMEA APAC Global Americas EMEA APAC Global ® Vans % change (18)% (7)% (4)% (14)
Slide 34: Appendix: Segment, Geographic & Channel Revenue
Appendix: Segment, Geographic & Channel Revenue VF CORPORATION Supplemental Financial Information Reportable Segment, Geographic and Channel Revenue Growth - Three and Twelve Months Ended March 2023 (Unaudited) Three Months Ended March 2023 Twelve Months Ended March 2023 % Change % Change Constant %