V.F. Corporation · NYSE:VFC
V.F — Q3 FY2023 Earnings Presentation
33 slides from V.F's earnings presentation, Feb 7, 2023
Slide 1: Q3'FY23 Earnings
Q3’FY23 EARNINGS F E B RUARY 7 , 2 0 2 3 Internal Use
Slide 2: Safe Harbor Statement
Safe Harbor Statement Certain statements included in this release 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 risks
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, all quarter-to-date numbers noted on an “adjusted” basis exclude costs related to VF’s business model transformation, costs related to a tr
Slide 4: Benno Dorer, Interim President & CEO
BENNO DORER INT E RIM P RE S ID ENT & C E O Internal Use
Slide 5: Focus on execution near term, with targeted actions to deliver strong & sustainable returns
Focus on execution near term, with targeted actions to deliver strong & sustainable returns over the long term 1. Q3 performance (Revenue +3% C$) delivered in a very challenging environment, highlighted examples of success while showcasing clear areas to improve 2. Near term focus is to invest in en
Slide 6: Q3'FY23 Revenue +3% in a challenging environment
Q3’FY23 Revenue +3% in a challenging environment Two near-term priorities to improv e execution: Vans, Supply Chain Q3 HIGHLIGHTS NEAR-TERM PRIORITIES ▪ Broad-based growth in EMEA +10% ▪ Turning around Vans – The North Face EMEA +13% – Americas -13%, largely due to execution – Vans EMEA +7% – Four g
Slide 7: Improve Vans execution, particularly in North America
Improve Vans execution, particularly in North America Action plans address consumer, products, marketplace and operating model CONSUMER PRODUCT M ARKET P L A C E OP ERAT I N G M ODEL 7 Q 3 F I S C AL 2 0 2 3
Slide 8: The North Face: An execution blueprint
The North Face: An execution blueprint Q3 Rev enue +7% (+13% C$) ▪ Strong consumer engagement ▪ Iconic products with robust product line excitement ▪ Broad-based growth across channels and regions 8 Q 3 F I S C AL 2 0 2 3
Slide 9: Returning to supply chain excellence
Returning to supply chain excellence Committed to better serv ing our consumers and customers at a more normalized cost for VF Supply chain performance negatively impacted revenue and profits in the high volume Q3 Taking aggressive actions to improve service levels and reduce inventory and costs Ret
Slide 10: Taking prudent steps to strengthen financial position
Taking prudent steps to strengthen financial position Significant actions to generate profitable and sustained growth ▪ Near-term focus on current portfolio to reinforce core strength ▪ Pursue strategic alternatives for global Packs* business ▪ Lean into cost savings to enable strong investments in
Slide 11: High degree of confidence in VF's future
High degree of confidence in VF’s future Ability to return to strong and sustainable long -term shareholder v alue creation ▪ Brands in the portfolio benefit from long-term category and consumer tailwinds ▪ Clear focus on Vans and supply chain as near-term priorities to improve performance ▪ Sharpen
Slide 12: Taking the right steps to realize VF's full potential
Taking the right steps to realize VF’s full potential Guided by our consumers, people, shareholders, and purpose ▪ World-class leadership and talent ▪ Improved execution near-term ▪ Greater focus on the consumer ▪ Financial strength and predictability Internal 12 Use Q 3 F I S C AL 2 0 2 3
Slide 13: Matt Puckett, EVP, CFO
MATT PUCKETT E V P, C F O Internal Use
Slide 14: Q3'FY23 Financial Overview
Q3’FY23 Financial Overview Grew C$ rev enue despite challenging env ironment and operational hurdles ▪ Revenue of $3.5B, -3%/+3% C$ T O T AL R E VE N U E ( $ M ) – Balanced growth across Wholesale +2% C$ $3,624 $3,531 and DTC +3% C$ +3% C$ ▪ Adjusted Gross Margin of 54.9%, -140bps ▪ Adjusted Operati
Slide 15: EMEA momentum continues with APAC improving
EMEA momentum continues with APAC improving Americas impacted largely by softer results in Vans and Dickies -2% / +10% C$ EMEA -2% / -1% C$ AMERICAS -7% / +4% C$ APAC 15 Q 3 F I S C AL 2 0 2 3
Slide 16: Gross Margin Bridge
Gross Margin Bridge Impacted primarily by elev ated inv entories, discounts and promotional activ ity; partially offset by fav orable mix and strategic pricing actions +50 bps 56.3% 54.9% -170 bps -20 bps Note: Gross Margin on an adjusted basis 16 * Reflects the impact of FX translation only Q 3 F I
Slide 17: Operating Margin Bridge
Operating Margin Bridge Reflecting lower Gross Margin and cost delev erage, primarily higher marketing 17.7% 14.9% -120 bps -110 bps -50 bps Note: Operating Margin on an adjusted basis *Numbers on an adjusted basis, excluding FX ** Reflects the impact of FX translation only 17 Q 3 F I S C AL 2 0 2 3
Slide 18: Supply chain improving into next season
Supply chain improving into next season Taking immediate and specific actions to address internal and external issues Easing disruption and cost Q3 impacts starting Fall 2023 ▪ Elevated lead times in manufacturing ▪ Improving lead times, leading to better and distribution on-time performance – Bette
Slide 19: FY23 Outlook
FY23 Outlook Affirming EPS guidance at midpoint of, and rev enue outlook within, prev ious range FY23 PREVIOUS GUIDANCE* CURRENT GUIDANCE Revenue (C$) +3% to +4% ~+3% The North Face® up at least +12% up at least +14% Vans® down mid-single digit % down high single digit % Adjusted gross margin do
Slide 20: Return to more profitable and consistent growth in FY24
Return to more profitable and consistent growth in FY24 FY24 FINANCIAL EXPECTATIONS OPERATING OPERATING REVENUE M ARGINS EARNINGS CASH FLOW + at least low + Gross and + double-digit % + growth faster single digit % Operating C$ than EPS C$ Margin expansion 20 Q 3 F I S C AL 2 0 2 3
Slide 21: Strategic actions to strengthen financial position
Strategic actions to strengthen financial position Sharpen focus on highest v alue creation opportunities ▪ Capital allocation focus on the current portfolio, reducing leverage and returning capital to shareholders, through the dividend ▪ Right-sized dividend toward target payout ratio of ~50% and a
Slide 22: Returning to strong and consistent shareholder value creation
Returning to strong and consistent shareholder value creation VF’s brand portfolio remains well positioned to deliver long-term sustainable and profitable growth Near term, we are taking decisive action to strengthen our financial position, improve our operating performance and deliver consistent ea
Slide 23: Appendix
APPENDIX 23
Slide 24: COVID-19 Operational Update as of January 27, 2023
COVID-19 Operational Update as of January 27, 2023 ▪ All offices open North America ▪ No stores were closed during the third quarter; all stores are currently open ▪ All offices open EMEA ▪ No stores were closed during the third quarter due to COVID-19; all stores are currently open ▪ All offices op
Slide 25: Q3'FY23: Revenue Breakdown
Q3’FY23: Revenue Breakdown BIG 4 BRANDS -3% (+2% C$): ▪ Vans® -13% (-9% C$) TOTAL ▪ ▪ The North Face ® +7% (+13% C$ ) Timb erland ® flat (+6% C$) ▪ Dickies® -16% (-13% C$) $3,531 M REVENUE INTERNATIONAL -3% (+8% C$) -3% Reported +3% C$ ▪ APAC -7% (+4% C$), including Greater China -11% (-1% C$) and M
Slide 26: Vans Global Performance
Q 3 ’F Y 2 3 Vans ® Global Performance REVENUE OF $927 MILLION, -13% VS PRIOR YEAR (-9% C$) ▪ DTC declines resulting from lower traffic in the Americas and ongoing COVID disruption in China ▪ Wholesale impacted by higher promotional environment in the channel and excess inventory in the marketplace
Slide 27: The North Face Global Performance
Q 3 ’F Y 2 3 The North Face ® Global Performance REVENUE OF $1,321 MILLION, +7% VS PRIOR YEAR (+13% C$) ▪ Strong performance across all regions and global channels ▪ Continued global DTC growth driven by strong double-digit growth in both channels ▪ Global launch of second chapter of the "It's More
Slide 28: Timberland Global Performance
Q 3 ’F Y 2 3 Timberland ® Global Performance REVENUE OF $595 MILLION, FLAT VS PRIOR YEAR (+6% C$) ▪ Global performance driven by EMEA and Americas wholesale, despite supply challenges affecting these regions; Americas wholesale benefited from timing shifts vs prior year REVENUE ▪ Global DTC impacted
Slide 29: Dickies Global Performance
Q 3 ’F Y 2 3 Dickies ® Global Performance REVENUE OF $177 MILLION, -16% VS PRIOR YEAR (-13% C$) ▪ Mixed results across regions led to third consecutive quarter of global revenue declines ▪ Americas challenged across channels as key accounts experienced lower traffic and implemented inventory managem
Slide 30: Appendix: GAAP to Non-GAAP
Appendix: GAAP to Non-GAAP 30 Q 3 F I S C AL 2 0 2 3
Slide 31: Appendix: GAAP to Non-GAAP
Appendix: GAAP to Non-GAAP 31 Q 3 F I S C AL 2 0 2 3
Slide 32: Appendix: Top Brand Revenue
Appendix: Top 4 Brand Revenue 32 Q 3 F I S C AL 2 0 2 3
Slide 33: Appendix: Segment, Geographic & Channel Revenue – Q3'23
Appendix: Segm ent, Geographic & Channel Revenue – Q3’23 33 Q 3 F I S C AL 2 0 2 3