V.F. Corporation · NYSE:VFC
V.F — Q2 2021 Earnings Presentation
39 slides from V.F's earnings presentation, Oct 16, 2020
Slide 1: Q2 Fiscal 2021 Earnings Presentation
Q2 Fiscal 2021 Earnings Presentation OCTOBER 16, 2020
Slide 2: Safe Harbor Statement
Safe Harbor Statement Certain statements included in this presentation 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 ris
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 and Jeans businesses. Additionally, unless otherwise noted, all numbers are on an “adjusted” basis which excludes certain cost optimization activities indirectly re
Slide 4: VF Purpose
VF Purpose WE POWER MOVEMENTS OF SUSTAINABLE AND ACTIVE LIFESTYLES FOR THE BETTERMENT OF PEOPLE AND OUR PLANET Ranked #33 Ranked #1 on social metrics (#2 in Consumer Durables & Apparel) (#21 overall) out of the Russell 1000 Index Q 2 F I S C A L 2 0 2 1 4
Slide 5: Inclusion and Diversity
Inclusion and Diversity 50% overall representation of women Targeting gender parity in VF’s workforce throughout VF’s corporate leadership structure by 2030 38% Director level and above roles held by women (from 35% in 2015) Launched Council to Advance Racial Equity (CARE) 55% overall representation
Slide 6: Recent Sustainability Initiatives
Recent Sustainability Initiatives Timberland® announced goal to have icebreaker announced its vision “net positive impact” on nature by 2030 to be plastic free by 2023 (from ~90% natural fiber today) • 100% of products to be designed for circularity • 100% of natural materials to be sourced from reg
Slide 7: Fiscal 2024 Global Business Strategy
Fiscal 2024 Global Business Strategy DRIVE AND ELEVATE DISTORT TO OPTIMIZE OUR DIRECT ASIA PORTFOLIO CHANNELS ACCELERATE CONSUMER-MINDED, RETAIL- CENTRIC, HYPER-DIGITAL BUSINESS MODEL TRANSFORMATION Q 2 F I S C A L 2 0 2 1 7
Slide 8: COVID-19 Update
COVID-19 Update
Slide 9: COVID-19 Operational Update as of 10/15/20
COVID-19 Operational Update as of 10/15/20 Offices continue phased return; two locations remain completely closed At the end of the first quarter 75% of VF’s DTC stores were open and over 95% were open at the end of the second North America quarter, currently all stores are open VF’s wholesale
Slide 10: Q2'21 Business & Financial Performance
Q2’21 Business & Financial Performance
Slide 11: Business Performance
Q2’21 Business Performance Adjusted Revenue Gross Margin Vans® $2.6B 50.9% -10% / -11% C$ -18%* / -19% C$* -350bps / -360bps C$ The North Face® DTC Greater China -25% / -26% C$ -16%* / -17% C$* +16% / +14% C$ Digital +44% / +42% C$ Mainland China +21% / +19% C$ *On an adjusted basis Q 2 F I S C A L
Slide 12: Financial Performance
Q2’21 Financial Performance Adjusted Adjusted Adjusted Operating Earnings Revenue Gross Margin Margin Per Share* $2.6B 50.9% 13.1% $0.67 *On a diluted basis Q 2 F I S C A L 2 0 2 1 12
Slide 13: Financial Summary
Q2’21 Financial Summary $ in millions; except EPS Q2’20 Q2'21 YOY CHANGE ADJUSTED REVENUE $3,170 $2,608 -18% ADJUSTED GROSS MARGIN 54.4% 50.9% -350 bps ADJUSTED OPERATING INCOME $576 $342 -41% ADJUSTED OPERATING MARGIN 18.2% 13.1% -510 bps ADJUSTED NET INCOME $481 $260 -46% ADJUSTED EARNINGS PER SHA
Slide 14: Strategic Growth Drivers
Q2’21 Strategic Growth Drivers Big 4 Brands International DTC DTC Digital -16% -15% -16% +44% -17% C$ -17% C$ -17% C$ +42% C$ Revenue on an adjusted basis Q 2 F I S C A L 2 0 2 1 14
Slide 15: Q2'21: Revenue Breakdown
Q2'21: Revenue Breakdown REVENUE -19% C$ TOTAL BIG 4 BRANDS -16% (-17% C$), with Vans® -10% (-11% C$), The North Face® -25% (-26% C$), Timberland ® -24% (-26% C$), and Dickies® +19% $2,608 M REVENUE (+18% C$) -18% Reported -18% INTERNATIONAL -15% (-17% C$), with Greater China +16% (+14% C$), includi
Slide 16: Big Four Brand Revenue
Q2’21 Big Four Brand Revenue -10% -25% -24% +19% -11% C$ -26% C$ -26% C$ +18% C$ Q 2 F I S C A L 2 0 2 1 16
Slide 17: Gross Margin Bridge
Q2’21 Gross Margin Bridge Includes -110 bps impact from FX 54.4% transaction timing -50 bps Full year mix benefit expected to be above long- range plan +10 bps 50.9% -310bps Note: Gross Margin on an adjusted basis *Numbers on an adjusted organic basis ** Reflects the impact of FX translation only Q
Slide 18: Operating Margin Bridge
Q2’21 Operating Margin Bridge 18.2% -350 bps -30 bps +10bps 13.1% -140 bps Note: Operating Margin on an adjusted basis *Numbers on an adjusted organic basis Q 2 F I S C A L 2 0 2 1 18 ** Reflects the impact of FX translation only
Slide 19: Q2'21 Brand Performance
Q2'21 Brand Performance
Slide 20: Vans Global Performance
Q2’21 Vans® Global Performance REVENUE DECREASED -10% (-11% C$) Revenue decline due to DTC store closures and weaker back-to-school selling season -10% DTC -23% with +51% (+49% C$) growth in DTC Digital Wholesale returns to growth as deliveries normalized and sell-through remains strong with w
Slide 21: Vans Regional Performance
Q2’21 Vans® Regional Performance AM E R I C AS - 1 7 % EUROPE Flat (-4% C$) AP A C + 5 % ( + 4 % C $ ) DTC +10% DTC DTC (+5% C$) WHOLESALE +4% WHOLESALE (+3% C$) -31% WHOLESALE +5% +10% (-30% C$) -4% (+4% C$) (-8% C$) DTC B&M impacted by store closures during the quarter DTC Digital +47% C$ DT
Slide 22: The North Face Global Performance
Q2’21 The North Face ® Global Performance REVENUE DECREASED -25% (-26% C$) Revenue decline due to declines in fall order book and lower B&M store traffic across regions -25% DTC -14% (-15% C$), including DTC Digital +42% (+40% C$) Relative strength from Mountain Lifestyle apparel, Footwear and
Slide 23: The North Face Regional Performance
Q2’21 The North Face ® Regional Performance AM E R I C AS - 3 2 % EUROPE -15% (-19% C$) AP A C - 3 % ( - 5 % C $ ) DTC DTC DTC -26% +20% -8% (+15% C$) (-10% C$) WHOLESALE -23% WHOLESALE WHOLESALE (-27% C$) -1% -34% (-3% C$) DTC B&M impacted by store closures during the quarter DTC Digital +88% C
Slide 24: Timberland Global Performance
Q2’21 Timberland ® Global Performance REVENUE DECREASED -24% (-26% C$) -24% DTC +6% (+3% C$), including +66% (+62% C$) growth in DTC Digital Continued relative strength from Timberland PRO® and Outdoor Footwear, with improving trends in Classic Boot business Generated brand heat in Women’s ca
Slide 25: Timberland Regional Performance
Q2’21 Timberland ® Regional Performance AM E R I C AS - 2 7 % EUROPE -26% (-30% C$) AP A C - 7 % ( - 9 % C $ ) DTC -2% DTC +18% DTC (+13% C$) -2% WHOLESALE (-4% C$) -3 7 % (-4 0 % C$) WHOLESALE WHOLESALE -10% -3 1 % (-12% C$) DTC B&M impacted by store closures during the quarter DTC Digital grow
Slide 26: Dickies Global Performance
Q2’21 Dickies® Global Performance REVENUE INCREASED +19% (+18% C$) +19% Broad-based strength across regions, channels and categories DTC +28% (+27% C$), including +36% (+34% C$) growth in DTC Digital Growth in APAC led by +65% (+62% C$) growth in Greater China, including +61% (+58% C$) in Mai
Slide 27: Dickies Regional Performance
Q2’21 Dickies® Regional Performance AM E R I C AS + 1 4 % EUROPE +8% (+3% C$) AP A C + 4 8 % ( + 4 5 % C $ ) DTC DTC +24% +76% (+68% C$) DTC +23% (+21% C$) WHOLESALE WHOLESALE +1% +60% WHOLESALE (-3% C$) (+57% C$) +12% (+13% C$) DTC Digital +34% C$; top wholesale partners DTC Digital +115% C$ wi
Slide 28: FY'21 Update
TL HE pe LAAT TTT TL - LACE mA
Slide 29: FY'21 Expected Business Evolution
FY’21 Expected Business Evolution 1Q21 2Q21 3Q21 4Q21 North America and EMEA North America re-opening in Steady improvement in North North America stabilizes begin to reopen flux America On a normalized basis, EMEA Continued steady Continued steady EMEA stabilizes begins to return to
Slide 30: Fiscal Year 2021 Outlook
Fiscal Year 2021 Outlook Adjusted Earnings Per Adjusted Free Revenue Share* Cash Flow >$9.0B >$1.20 >$600M Q 2 F I S C A L 2 0 2 1 30 *On a diluted basis.
Slide 31: Ongoing commitment to dividend
Ongoing commitment to dividend Dividend aristocrat $0.49* 48 consecutive years of dividend growth Core pillar of VF TSR algorithm +2% Strong confidence in stability of business Q 2 F I S C A L 2 0 2 1 31 *On a per share basis, payable on December 21, 2020, to shareholders of record on Decemb
Slide 32: FY'21 Cash Evolution
FY’21 Cash Evolution Net proceeds from Occupational Work divestiture incremental to $3.0B ($2.2B) liquidity estimates below >$0.7B ~($0.4B) ($0.1B) ~$3.0B ($0.4B) $1.0B $2.7B $1.4B FY’21 Beginning 4/7/20 Term Debt Revolver & H1’21 Free H1’21 Dividend H1’21 Ending YTG Free Cash YTG FY’21 Ending Cash
Slide 33: Appendix
A pendi a eS ae SIH, emer = 7 x \ \ RHE \eretioes Ais A \
Slide 34: 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 Six Months Ended September 2020 (Unaudited) (In thousands, except per share amounts) As Reported Transaction and Deal Specified Strategic (a) Three Mon
Slide 35: 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 Six Months Ended September 2019 (Unaudited) (In thousands, except per share amounts) Relocation and Other As Reported Transaction and Deal Strategic Bu
Slide 36: Appendix: Top 4 Brand Revenue
Appendix: Top 4 Brand Revenue VF CORPORATION Supplemental Financial Information Top 4 Brand Revenue Information (Unaudited) Three Months Ended September 2020 Six Months Ended September 2020 Top 4 Brand Revenue Growth Americas EMEA APAC Global Americas EMEA APAC Global ® Vans % change (17)% (0)% 5% (
Slide 37: Appendix: Segment, Geographic & Channel Revenue – Q2'21
Appendix: Segment, Geographic & Channel Revenue – Q2'21 VF CORPORATION Supplemental Financial Information Reportable Segment, Geographic and Channel Revenue Growth - Three Months Ended September 2020 (Unaudited) Three Months Ended September 2020 % Change Constant % Change % Change Constant Currency
Slide 38: Appendix: Segment, Geographic & Channel Revenue – H1'21
Appendix: Segment, Geographic & Channel Revenue – H1'21 VF CORPORATION Supplemental Financial Information Reportable Segment, Geographic and Channel Revenue Growth - Six Months Ended September 2020 (Unaudited) Six Months Ended September 2020 % Change Constant (a) (a) % Change % Change Constant Curre
Slide 39: Q 2 F I S C A L 2 0 2 1 39
Q 2 F I S C A L 2 0 2 1 39