V.F. Corporation · NYSE:VFC
V.F — Q1 FY2019 Earnings Presentation
38 slides from V.F's earnings presentation, Jul 20, 2018
Slide 1: Q1 Fiscal 2019 Earnings Presentation
Q1 FISCAL 2019 EARNINGS PRESENTATION JULY 20, 2018
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 presented in this presentation, unless otherwise noted, are on an adjusted continuing operations basis which includes the contribution from the Williamson-Dickie, Icebreaker® and Altra® acquisitions (“acquisitions”) and excludes transaction and deal related costs and the
Slide 4: Our Purpose
OUR PURPOSE VF POWERS MOVEMENTS OF SUSTAINABLE AND ACTIVE LIFESTYLES FOR THE BETTERMENT OF PEOPLE AND OUR PLANET 4
Slide 5: Our Aspiration
OUR ASPIRATION VF WILL GROW BY CREATING AMAZING PRODUCTS AND BRAND EXPERIENCES THAT TRANSFORM AND IMPROVE THE LIVES OF CONSUMERS WORLDWIDE, WHILE DELIVERING SUPERIOR RETURNS TO OUR SHAREHOLDERS 5
Slide 6: 2021 Global Business Strategy
2021 GLOBAL BUSINESS STRATEGY Purpose / Aspiration CHOICES CAPABILITIES Design & Innovation Reshape Demand Creation & 4 Portfolio Brand Experience Transform TSR Insights & Analytics Distort Asia Model Retail Excellence CHOICES Elevate Demand & Supply DTC, Prioritizing Chain Agility Digital Talent 6
Slide 7: Business & Financial Highlights
BUSINESS & FINANCIAL HIGHLIGHTS 7
Slide 8: Q1'19: Business Highlights
Q1’19: BUSINESS HIGHLIGHTS ADJUSTED REVENUE VANS® $2.8B GROSS MARGIN +35% +23% / +12%* 50.5% strong growth in all regions / mix-shift toward higher channels / product families margin businesses INTERNATIONAL DTC WORK +14%* +16%* +8%* China +31%* and EMEA +18%* digital up +33%* balanced growth across
Slide 9: Q1'19: Financial Highlights
Q1’19: FINANCIAL HIGHLIGHTS ADJUSTED ADJUSTED ADJUSTED GROSS OPERATING EARNINGS REVENUE MARGIN MARGIN PER SHARE** $2.8B 50.5% 9.0% $0.43 +23% +90bps +200bps +62% +12%* +170bps* +210bps* +46%* *Organic **On a diluted basis 9
Slide 10: Q1'19: Financial Summary
Q1’19: FINANCIAL SUMMARY $ in millions; except EPS Q1’18 Q1’19 YOY CHANGE YOY CHANGE* REVENUE $2,269 $2,788 +23% +12% ADJUSTED GROSS MARGIN 49.6% 50.5% +90 bps +170bps ADJUSTED OPERATING INCOME $160 $250 +57% +44% ADJUSTED OPERATING MARGIN 7.0% 9.0% +200bps +210bps ADJUSTED NET INCOME $107 $172 +61%
Slide 11: Q1'19: Strategic Growth Drivers
Q1’19: STRATEGIC GROWTH DRIVERS BIG 3 BRANDS INTERNATIONAL DTC WORK +21% +14%* +16%* +8%* *Organic 11
Slide 12: New Segment Reporting
NEW SEGMENT REPORTING OUTDOOR ACTIVE WORK JEANS 12
Slide 13: Revenue Breakdown
Q1’19: REVENUE BREAKDOWN TOTAL BIG 3 BRANDS +21%, led by 35% growth at Vans® and 8% growth at The North Face® $2,788 M INTERNATIONAL increased +14%*, led by 18%* +23% Reported REVENUE growth in Europe and 31%* growth in China +12%* DTC DIGITAL increased +33%* WORK increased +8%* with balanced, broad
Slide 14: Gross Margin Bridge
Q1’19: GROSS MARGIN BRIDGE +20 bps +60 bps +90 bps 50.5% -80 bps 49.6% *Gross Margin on an adjusted basis 14
Slide 15: Operating Margin Bridge
Q1’19: OPERATING MARGIN BRIDGE +20 bps 9.0% +10 bps +170 bps +10 bps -10 bps Strategic Investments +12% 7.0% *Operating Margin on an adjusted basis 15
Slide 16: Brand Highlights
BRAND HIGHLIGHTS 16
Slide 17: Q1'19: Top Five Brand Revenue
Q1’19: TOP FIVE BRAND REVENUE +35% +8% +2% +4% +1% 17
Slide 18: Q1'19: Vans Global Performance
Q1’19: VANS ® GLOBAL PERFORMANCE REVENUE INCREASED 35%; STRONG GROWTH IN ALL REGIONS, CHANNELS & PRODUCT FAMILIES +35% Direct-to-consumer increased 37%, including >60% growth in DTC digital Wholesale increased 34% driven by broad-based strength globally GROWTH REMAINS DIVERSIFIED Classic footw
Slide 19: Q1'19: Vans Regional Performance
Q1’19: VANS ® REGIONAL PERFORMANCE AMERICAS +36% EUROPE +33% APAC +34% WHOLESALE WHOLESALE +40% DTC WHOLESALE +33% +21% +32% DTC DTC +35% +40% Growth remains balanced; icon Diversified growth with strong performance > 30% growth in China and Korea; broad management fuels diversity (Slip-On & i
Slide 20: Q1'19: The North Face Global Performance
Q1’19: THE NORTH FACE ® GLOBAL PERFORMANCE +8% REVENUE INCREASED 8%, DRIVEN BY >20% GROWTH IN EMEA AND APAC Direct-to-consumer increased 12%, including >30% growth in DTC digital Wholesale increased 5% driven by strength from EMEA and APAC OUTLOOK: Continue to expect revenue growth of 6% to 8% i
Slide 21: Q1'19: The North Face Regional Performance
Q1’19: THE NORTH FACE ® REGIONAL PERFORMANCE AMERICAS: FLAT EUROPE +21% APAC +32% WHOLESALE WHOLESALE WHOLESALE +29% DTC +37% -6% +7% DTC +9% DTC +30% First quality wholesale revenue up more Wholesale strength driven by strong Foundational investments in China than 20% performance in key strat
Slide 22: Q1'19: Timberland Global Performance
Q1’19: TIMBERLAND ® GLOBAL PERFORMANCE +2% REVENUE INCREASED 2%, DRIVEN BY TIMBERLAND PRO® AND EUROPE Wholesale increased 4% with improved quality and channel mix Direct-to-consumer driven by >20% growth in digital OUTLOOK: Continue to expect 2% to 4% revenue growth in fiscal 2019 BY CHANNEL BY
Slide 23: Q1'19: Timberland Regional Performance
Q1’19: TIMBERLAND ® REGIONAL PERFORMANCE AMERICAS +6% EUROPE +5% APAC -11% WHOLESALE -26% DTC WHOLESALE WHOLESALE +7% +10% +6% DTC FLAT DTC -4% Continued strength in Timberland PRO® Wholesale business driven by strength from 23% growth in China driven by Powertrain Sport and key strategic acco
Slide 24: Q1'19: Wrangler Global Performance
Q1’19: WRANGLER ® GLOBAL PERFORMANCE +4% REVENUE INCREASED 4%, DRIVEN BY STRENGTH IN THE CORE U.S. MARKET OUTLOOK: Expect about 1% revenue growth in fiscal 2019 BY CHANNEL BY REGION EMEA DTC +5% -8% APAC -5% WHOLESALE USA NON-US AMERICAS +5% +6% -5% 24
Slide 25: Q1'19: Wrangler Regional Performance
Q1’19: WRANGLER ® REGIONAL PERFORMANCE AMERICAS +5% EUROPE +5% APAC -5% DTC WHOLESALE DTC WHOLESALE -12% -7% +8% WHOLESALE +5% -5% +8% growth in core men’s bottoms; Wholesale business driven by strategic key Ongoing macroeconomic and geopolitical continued momentum in outdoor, account manageme
Slide 26: Q1'19: Lee Global Performance
Q1’19: LEE ® GLOBAL PERFORMANCE +1% REVENUE INCREASED 1%, DRIVEN BY INTERNATIONAL OUTLOOK: Expect revenue to be about flat in fiscal 2019 BY CHANNEL BY REGION EMEA DTC +7% FLAT WHOLESALE USA APAC +1% -3% +13% NON-US AMERICAS -9% 26
Slide 27: Q1'19: Lee Regional Performance
Q1’19: LEE ® REGIONAL PERFORMANCE AMERICAS -4% EUROPE +7% APAC +13% DTC WHOLESALE DTC WHOLESALE +3% WHOLESALE +12% -6% DTC -4% +18% +2% Continued strength in core men’s Wholesale business driven by key account China remains strong business driven by Extreme and Premium and digital partner focu
Slide 28: Q1'19: Work Performance
Q1’19: WORK PERFORMANCE REVENUE INCREASED 8%*, DRIVEN BY BALANCED GROWTH ACROSS NEARLY ALL BRANDS +8%* STRONG MOMENTUM IN WRANGLER® RIGGS AND TIMBERLAND PRO® DICKIES® MOMENTUM CONTINUES WITH STRENGTH IN INTERNATIONAL, LIFESTYLE AND DTC OUTLOOK: Continue to expect 4%* to 6%* revenue growth in fiscal
Slide 29: Financial Outlook
FINANCIAL OUTLOOK 29
Slide 30: Fiscal Year 2019: Outlook
FISCAL YEAR 2019: OUTLOOK ADJUSTED ADJUSTED ADJUSTED GROSS OPERATING EARNINGS REVENUE MARGIN MARGIN PER SHARE* ~$13.6B to ~$13.7B +10% to +11% 51.0% ~13.4% $3.52 - $3.57 +12% to +14% PREVIOUSLY +9% to +10% PREVIOUSLY 51.0% PREVIOUSLY 13.2% PREVIOUSLY $3.48 to $3.53 *On a diluted basis. 30
Slide 31: Fiscal Year 2019 Revenue Outlook: Segments
FI SCAL YEAR 2019 REVENUE OUTLOOK: SEGMENTS OUTDOOR ACTIVE WORK JEANS 6% to 8% 13% to 14% >35% ~FLAT 31
Slide 32: Fiscal Year 2019 Revenue Outlook: Brands
FI SCAL YEAR 2019 REVENUE OUTLOOK: BRANDS >+15% +6% to +8% +2% to +4% +1% ~FLAT PREVIOUSLY +12% to +13% 32
Slide 33: Fiscal Year 2019 Revenue Outlook: Regions
FI SCAL YEAR 2019 REVENUE OUTLOOK: REGIONS +12% to +13% EMEA +8% to +9% U.S. +14% to +15% APAC +9% to +10% AMERICAS (non-U.S.) 33
Slide 34: Fiscal Year 2019 Revenue Outlook: Channels
FI SCAL YEAR 2019 REVENUE OUTLOOK: CHANNELS DIRECT-TO- DIRECT-TO- CONSUMER - WHOLESALE CONSUMER DIGITAL +9% to +10% +11% to +13% >+30% 34
Slide 35: Appendix
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Slide 36: Appendix: GAAP to Non-GAAP
APPENDIX: GAAP TO NON-GAAP VF CORPORATION Supplemental Financial Information Reconciliation of Select GAAP Measures to Non-GAAP Measures (Unaudited) (In thousands, except per share amounts) As Reported Transaction and Deal Contribution from Adjusted Three Months Ended June 2018 under GAAP Related Co
Slide 37: Appendix: GAAP to Non-GAAP
APPENDIX: GAAP TO NON-GAAP VF CORPORATION Supplemental Financial Information Reportable Segment, Geographic and Channel Revenue Growth (Unaudited) Three Months Ended June 2018 % Change Organic % Change (a) Segment Revenues Growth Outdoor 6% 0% Active 25 % 25% Work 114 % 8% Jeans 3% 3% Other 28 % 28
Slide 38: VFC.com
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