V.F. Corporation · NYSE:VFC

V.F — Q4 2019 Earnings Presentation

55 slides from V.F's earnings presentation, May 22, 2019

  1. Slide 1: Q4 Fiscal 2019 Earnings Presentation

    Q4 FISCAL 2019 EARNINGS PRESENTATION May 22, 2019

  2. 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

  3. 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 Icebreaker® and Altra® acquisitions (“acquisitions”) and excludes transaction and deal related costs, including the losses on s

  4. Slide 4: Our Purpose

    OUR PURPOSE VF POWERS MOVEMENTS OF SUSTAINABLE AND ACTIVE LIFESTYLES FOR THE BETTERMENT OF PEOPLE AND OUR PLANET 4

  5. 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

  6. 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

  7. Slide 7: FY'19 Business & Financial Highlights

    FY’19 BUSINESS & FINANCIAL HIGHLIGHTS 7

  8. Slide 8: FY'19: Business Highlights

    FY’19: BUSINESS HIGHLIGHTS REVENUE ADJUSTED $13.8B GROSS MARGIN VANS® +12% / +13% C$ 51.0% +24% / +26% C$ strong growth in all regions / +7%* / +8%* C$ driven by mix-shift toward channels / product families higher margin businesses +10%** / +11%** C$ THE NORTH FACE® DTC CHINA +9% / +10% C$ +11%* / +

  9. Slide 9: FY'19: Financial Highlights

    FY’19: FINANCIAL HIGHLIGHTS ADJUSTED ADJUSTED ADJUSTED GROSS OPERATING EARNINGS REVENUE MARGIN MARGIN PER SHARE** $13.8B 51.0% 13.8% $3.78 +12% / +13% C$ +30bps +110bps +20% / +22% C$ +7%* / +8%* C$ +70bps* +120bps* +16%* / +18%* C$ + 10%*** / +11%*** C$ +90bps*** +180bps*** *Organic **On a diluted

  10. Slide 10: FY'19: Financial Summary

    FY’19: FINANCIAL SUMMARY $ in millions; except EPS FY’18 FY’19 YOY CHANGE YOY CHANGE* REVENUE $12,356 $13,849 +12% +7% ADJUSTED GROSS MARGIN 50.7% 51.0% +30bps +70bps ADJUSTED OPERATING INCOME $1,574 $1,908 +21% +17% ADJUSTED OPERATING MARGIN 12.7% 13.8% +110bps +120bps ADJUSTED NET INCOME $1,257 $1

  11. Slide 11: FY'19: Strategic Growth Drivers

    FY’19: STRATEGIC GROWTH DRIVERS BIG 3 BRANDS INTERNATIONAL DTC WORK +13% +5%* +11%* +6%* +14% C$ +8%* C$ +12%* C$ +6%* C$ *Organic 11

  12. Slide 12: FY'19: Revenue Breakdown

    FY’19: REVENUE BREAKDOWN BIG 3 BRANDS +13% (+14% C$), led by +24% (+26% TOTAL C$) growth at Vans® and +9% (+10% C%) growth at The North Face® $13,849 M INTERNATIONAL +5%* (+8%* C$), led by +17%* (+20%* +12% Reported REVENUE C$) growth in China and +4%* (+6%* C$) growth in +7%* EMEA DTC +11%* (+12%*C

  13. Slide 13: FY'19: Revenue Breakdown Ex. Kontoor Brands

    FY’19: REVENUE BREAKDOWN EX. KONTOOR BRANDS TOTAL TOTAL REVENUE increased +10%* (+11%* C$) $11,172 M REVENUE INTERNATIONAL increased +7%* (+10%* C$), led by +22%* (+25%* C$) growth in China and +6%* (+8%* +16% +10%* C$) growth in EMEA DTC increased +12%* (+13%*C$) with DIGITAL +25%* (+26%* C$) BY SE

  14. Slide 14: FY'19: Top Five Brand Revenue

    FY’19: TOP FIVE BRAND REVENUE +24% +9% flat -1% -7% +26% C$ +10% C$ +2% C$ +1% C$ -5% C$ 14

  15. Slide 15: FY'19: RemainCo + Kontoor Brands

    FY’19: REMAINCO + KONTOOR BRANDS VF RemainCo Kontoor Brands Total VF $ in Millions FY’18 FY’19 FY’18 FY’19 FY’18 FY’19 REVENUE $9,593 $11,172 $2,763 $2,677 $12,356 $13,849 - % Change +16% -3% +12% - % Change C$ +18% -2% +13% - % Change* C$ +11% -2% +8% OPERATING PROFIT** $1,551 $1,870 $410 $322 $1,9

  16. Slide 16: FY'19: Gross Margin Bridge

    FY’19: GROSS MARGIN B RIDGE +20 bps +60 bps 50.7% 51.0% NM -40 bps -10 bps *Gross Margin on an adjusted basis **Numbers on an adjusted organic basis excluding Kontoor Brands 16

  17. Slide 17: FY'19: Operating Margin Bridge

    FY’19: OPERATING MARGIN BRIDGE +130 bps NM +80 bps 13.8% 12.7% -40 bps -10 bps -50 bps Strategic Investments +12% *Operating Margin on an adjusted basis **Numbers on an adjusted organic basis excluding Kontoor Brands 17

  18. Slide 18: Q4'19 Business & Financial Highlights

    Q4’19 BUSINESS & FINANCIAL HIGHLIGHTS 18

  19. Slide 19: Q4'19: Business Highlights

    Q4’19: BUSINESS HIGHLIGHTS ADJUSTED REVENUE VANS® GROSS MARGIN +14% / +18% C$ $3.2B 51.1% diversified growth in all regions / +6% / +9% C$ +30bps channels / product families +8%** / +12%** C$ +90bps*** THE NORTH FACE® DTC CHINA +8% / +11% C$ +6%* / +9%* C$ +14%* / +20%* C$ strong growth across 7%* t

  20. Slide 20: Q4'19: Financial Highlights

    Q4’19: FINANCIAL HIGHLIGHTS ADJUSTED ADJUSTED ADJUSTED GROSS OPERATING EARNINGS REVENUE MARGIN MARGIN PER SHARE** $3.2B 51.1% 9.7% $0.60 +6% / +9% C$ +30bps -110bps -10% / -4% C$ +8%*** / +12%*** C$ +90bps*** -90bps* -8%* / -3%* C$ *Organic -10bps*** **On a diluted basis *** Organic, Excluding Konto

  21. Slide 21: Q4'19: Financial Summary

    Q4’19: FINANCIAL SUMMARY $ in millions; except EPS Q4’18 Q4’19 YOY CHANGE YOY CHANGE* REVENUE $3,045 $3,213 +6% +6% ADJUSTED GROSS MARGIN 50.8% 51.1% +30bps +20bps ADJUSTED OPERATING INCOME $329 $313 -5% -3% ADJUSTED OPERATING MARGIN 10.8% 9.7% -110bps -90bps ADJUSTED NET INCOME $267 $240 -10% -9% A

  22. Slide 22: Q4'19: Strategic Growth Drivers

    Q4’19: STRATEGIC GROWTH DRIVERS BIG 3 BRANDS INTERNATIONAL DTC WORK +9% +2%* +6%* +6%* +13% C$ +10%* C$ +9%* C$ +7%* C$ *Organic 22

  23. Slide 23: Q4'19: Revenue Breakdown

    Q4’19: REVENUE BREAKDOWN TOTAL BIG 3 BRANDS +9% (+13% C$), led by +14% (+18% C$) growth at Vans® and +8% (+11% C%) growth at The $3,213 M North Face® +6% Reported REVENUE INTERNATIONAL +2%* (+10%* C$), led by +14%* (+20%* +6%* C$) growth in China and EMEA (+8%* C$) DTC +6%* (+9%*C$) with DIGITAL +17

  24. Slide 24: Q4'19: Revenue Breakdown Ex. Kontoor Brands

    Q4’19: REVENUE BREAKDOWN EX. KONTOOR BRANDS TOTAL TOTAL REVENUE increased +8%* (+12%* C$) $2,577 M REVENUE INTERNATIONAL increased +5%* (+12%* C$), led by +8% +8%* +19%* (+25%* C$) growth in China and +2%* growth (+10%* C$) in EMEA DTC increased +7%* (+10%*C$) with DIGITAL +18%* (+22%* C$) BY SEGMEN

  25. Slide 25: Q4'19: Top Five Brand Revenue

    Q4’19: TOP FIVE BRAND REVENUE +14% +8% +1% flat -8% +18% C$ +11% C$ +6% C$ +3% C$ -4% C$ 25

  26. Slide 26: Q4'19: RemainCo + Kontoor Brands

    Q4’19: REMAINCO + KONTOOR BRANDS VF RemainCo Kontoor Brands Total VF $ in Millions Q4’18 Q4’19 Q4’18 Q4’19 Q4’18 Q4’19 REVENUE $2,386 $2,577 $659 $636 $3,045 $3,213 - % Change +8% -4% +6% - % Change C$ +11% -1% +9% - % Change* C$ +12% -1% +9% OPERATING PROFIT** $317 $304 $106 $51 $423 $355 - % Chang

  27. Slide 27: Q4'19: Gross Margin Bridge

    Q4’19: GROSS MARGIN BRIDGE +120 bps 50.8% NM 51.1% NM -70 bps -20 bps *Gross Margin on an adjusted basis **Numbers on an adjusted organic basis excluding Kontoor Brands 27

  28. Slide 28: Q4'19: Operating Margin Bridge

    Q4’19: OPERATING MARGIN BRIDGE +130 bps +100 bps -10 bps 10.8% 9.7% -240 bps -20 bps -70 bps Strategic Investments +17% *Operating Margin on an adjusted basis **Numbers on an adjusted organic basis excluding Kontoor Brands 28

  29. Slide 29: Brand Highlights

    = SS Rr pe rim a ee) BRAND HIGHLIGHTS

  30. Slide 30: Q4'19: Vans Global Performance

    Q4’19: VANS ® GLOBAL PERFORMANCE REVENUE INCREASED +14% (+18% C$) WITH STRONG GROWTH ACROSS REGIONS, CHANNELS & +14% PRODUCT CATEGORIES  DTC +17% (+19% C$) with +15% total comp, including +31% (+35% C$) growth in DTC digital  Wholesale increased +12% (+17% C$) as sell-through remains strong GROWTH

  31. Slide 31: Q4'19: Vans Regional Performance

    Q4’19: VANS ® REGIONAL PERFORMANCE AMERICAS +21% (+22% C$) EUROPE +2% (+10% C$) APAC +8% (+13% C$) DTC +5% (+14% C$) WHOLESALE -1% DTC DTC WHOLESALE WHOLESALE (+3% C$) +19% +18% +25% +1% (+25% C$) (+27% C$) (+9% C$)  Balanced growth across channels &  Revenue growth driven by >20% growth in  Stre

  32. Slide 32: Q4'19: The North Face Global Performance

    Q4’19: THE NORTH FACE ® GLOBAL PERFORMANCE REVENUE INCREASED +8% (+11% C$) WITH STRENGTH ACROSS ALL REGIONS & CHANNELS +8%  DTC +4% (+7% C$), including +7% total comp and +13% (+16% C$) growth in DTC digital  Wholesale increased +11% (+15% C$) driven by strength in all regions  Strong growth acro

  33. Slide 33: Q4'19: The North Face Regional Performance

    Q4’19: THE NORTH FACE ® REGIONAL PERFORMANCE AMERICAS +10% (+10% C$) EUROPE +5% (+14% C$) APAC +8% (+13% C$) WHOLESALE DTC DTC DTC +14% +5% WHOLESALE +2% WHOLESALE +6% (+15% C$) +6% (+11% C$) +10% (+11% C$) (+15% C$) (+15% C$)  Double-digit growth in Mountain Sports &  Double-digit growth in Urban

  34. Slide 34: Q4'19: Timberland Global Performance

    Q4’19: TIMBERLAND ® GLOBAL PERFORMANCE REVENUE +1% (+6% C$) DRIVEN BY BALANCED GROWTH FROM DTC & WHOLESALE WITH STRENGTH +1% FROM AMERICAS AND TIMBERLAND PRO  DTC digital increased 20% (+27% C$)  Diversification strategy continues; high single digit growth in Non-Classic footwear driven by both me

  35. Slide 35: Q4'19: Timberland Regional Performance

    Q4’19: TIMBERLAND ® REGIONAL PERFORMANCE AMERICAS +6% (+7% C$) EUROPE -3% (+5% C$) APAC +2% (+6% C$) DTC DTC DTC +9% +4% -7% WHOLESALE (+11% C$) (+13% C$) (-3% C$) WHOLESALE WHOLESALE +4% -7% +18% (+6% C$) (Flat C$) (+22% C$)  Footwear +9% as diversification strategy  Revenue +5% C$ driven by stre

  36. Slide 36: Wrangler Global Performance

    Q4’19: WRANGLER ® GLOBAL PERFORMANCE Flat REVENUE FLAT (+3% C$) DRIVEN BY WESTERN & WORKWEAR; EXCLUDING IMPACT OF CUSTOMER BANKRUPTCY REVENUE INCREASED 4% C$ BY CHANNEL BY REGION EMEA -11% (-3% C$) DTC -3% APAC (+4% C$) -9% (Flat C$) WHOLESALE USA NON-US AMERICAS Flat +4% -14% (+6% C$) (+3% C$) 36

  37. Slide 37: Q4'19: Wrangler Regional Performance

    Q4’19: WRANGLER ® REGIONAL PERFORMANCE AMERICAS +3% (+4% C$) EUROPE -11% (-3% C$) APAC -9% (Flat C$) DTC DTC +1% -16% WHOLESALE (+8% C$) (-8% C$) -9% WHOLESALE WHOLESALE Flat C$ +3% -10% (+4% C$) (-2% C$)  Excluding impact of customer  Wholesale decline driven by softness in  Ongoing macroeconomi

  38. Slide 38: Q4'19: Lee Global Performance

    Q4’19: LEE ® GLOBAL PERFORMANCE -8% REVENUE -8% (-4% C$) IMPACTED BY CUSTOMER BANKRUPTCY; EXCLUDING IMPACT OF CUSTOMER BANKRUPTCY REVENUE DECLINED 2% C$ BY CHANNEL BY REGION EMEA -18% (-11% C$) DTC USA -10% WHOLESALE -8% (-6% C$) APAC -8% -1% (+5% C$) (-4% C$) NON-US AMERICAS Flat (+8% C$) 38

  39. Slide 39: Q4'19: Lee Regional Performance

    Q4’19: LEE ® REGIONAL PERFORMANCE AMERICAS -7% (-6% C$) EUROPE -18% (-11% C$) APAC -1% (+5% C$) DTC DTC -19% DTC -6% (-12% C$) -9% (-5% C$) (-3% C$) WHOLESALE WHOLESALE WHOLESALE -7% -18% +1% (-6% C$) (-10% C$) (+8% C$)  Excluding impact of customer bankruptcy,  Wholesale decline driven by softnes

  40. Slide 40: Q4'19: Work Performance

    Q4’19: WORK PERFORMANCE REVENUE INCREASED 6%* (+7%* C$), DRIVEN BY BALANCED GROWTH ACROSS NEARLY ALL +6%* BRANDS DICKIES® MOMENTUM CONTINUES WITH STRENGTH GLOBALLY, AND IN LIFESTYLE AND DIGITAL FISCAL 2020 OUTLOOK: Revenue expected to increase 4%* to 6%* C$ +4%* +6% +8% +5% +27% +6%* C$ +7% C$ +6% C

  41. Slide 41: Financial Outlook

    FINANCIAL OUTLOOK 41

  42. Slide 42: Fiscal Year 2020: Outlook

    FISCAL YEAR 2020: OUTLOOK ADJUSTED ADJUSTED ADJUSTED GROSS OPERATING EARNINGS REVENUE MARGIN MARGIN PER SHARE** $11.7B to $11.8B +5% to +6% ~54.0% ~13.7% $3.30 to $3.35 +15% to +17% +7%* to +8%* +60bps +60bps +17%* to +19%* *Organic, C$ basis **On a diluted basis. 42

  43. Slide 43: Fiscal Year 2020 Revenue Outlook: Segments

    FI SCAL YEAR 2020 REVENUE OUTLOOK: SEGMENTS OUTDOOR ACTIVE WORK +4% to +5% +6% to +7% +3% to +5% +5%* to +6%* +9%* to +10%* +4%* to +6%* *Organic, C$ basis 43

  44. Slide 44: Fiscal Year 2020 Revenue Outlook: Brands

    FI SCAL YEAR 2020 REVENUE OUTLOOK: BRANDS +9% to +11% +6% to +8% “Up modestly” +4% to +6% +10%* to +12%* +7%* to +9%* +1%* to +3%* +5%* to +7%* *Organic, C$ basis 44

  45. Slide 45: Fiscal Year 2020 Revenue Outlook: Regions

    FI SCAL YEAR 2020 REVENUE OUTLOOK: REGIONS +1% to +3% +5%* to +7%* +5% to +6% EMEA U.S. +12% to +14% +14%* to +16%* APAC +2% to 4% +3%* to +5%* ex. impact of business model change +9%* to +11%* AMERICAS (non-U.S.) *Organic, C$ basis 45

  46. Slide 46: Fiscal Year 2020 Revenue Outlook: Channels

    FI SCAL YEAR 2020 REVENUE OUTLOOK: CHANNELS DIRECT-TO- DIRECT-TO- CONSUMER - WHOLESALE CONSUMER DIGITAL +2% to 3% +9% to +11% +25% +4%* to +5%* +10%* to +12%* *Organic, C$ basis 46

  47. Slide 47: Appendix

    —————Oe—E—>=>E——— APPENDIX

  48. Slide 48: Appendix: GAAP to Non-GAAP

    APPENDIX: GAAP TO NON-GAAP S upplemental Financial Information Reconciliation of S elect GAAP Measures to Non-GAAP Measures - Three and Twelve Months Ended March 2019 (Unaudited) APPENDIX: GAAP TO NON-GAAP (In thousands, except per share amounts) Relocation and As Reported Transaction and Deal Other

  49. Slide 49: Appendix: GAAP to Non-GAAP

    APPENDIX: GAAP TO NON-GAAP VF CORPORATION S upplemental Financial Information Reconciliation of S elect GAAP Measures to Non-GAAP Measures - Three and Twelve Months Ended March 2018 (Unaudited) (In thousands, except per share amounts) As Reported Transaction and Deal Contribution from Three Months E

  50. Slide 50: Appendix: Top Brand Revenue

    APPENDIX: TOP 5 BRAND REVENUE VF CORPORATION S upplemental Financial Information Top 5 Brand Revenue Information (Unaudited) Three Months Ended March 2019 Twelve Months Ended March 2019 Top 5 Brand Revenue Growth Americas EMEA APAC Global Americas EMEA APAC Global ® Vans % change 21 % 2% 8% 14 % 30

  51. Slide 51: Appendix: Reportable Segment, Geographic and Channel Revenue Growth

    APPENDIX: REPORTABLE SEGMENT, GEOGRAPHIC AND CHANNEL REVENUE GROWTH – EX. KONTOOR VF CORPORATION S upplemental Financial Information Reportable S egment, Geographic and Channel Revenue Growth (Unaudited) Three Months Ended March 2019 Twelve Months Ended March 2019 % Change % Change % Change Constant

  52. Slide 52: Appendix: Segment, Geographic and Channel Revenue Growth – Ex. Kontoor

    APPENDIX: REPORTABLE SEGMENT, GEOGRAPHIC AND CHANNEL REVENUE GROWTH – EX. KONTOOR VF CORPORATION S upplemental Financial Information Reportable S egment, Geographic and Channel Revenue Growth, VF Excluding Kontoor Brands (Unaudited) Three Months Ended March 2019 Twelve Months Ended March 2019 % Chan

  53. Slide 53: Appendix: GAAP to Non-GAAP – Ex. Kontoor

    APPENDIX: GAAP TO NON-GAAP – EX. KONTOOR APPENDIX: GAAP TO NON-GAAP VF CORPORATION S upplemental Financial Information Reconciliation of S elect GAAP Measures to Non-GAAP Measures - Three and Twelve Months Ended March 2019, VF Excluding Kontoor Brands (Unaudited) (In thousands, except per share amou

  54. Slide 54: Appendix: GAAP to Non-GAAP – Ex. Kontoor

    APPENDIX: GAAP TO NON-GAAP – EX. KONTOOR APPENDIX: GAAP TO NON-GAAP VF CORPORATION S upplemental Financial Information Reconciliation of S elect GAAP Measures to Non-GAAP Measures - Three and Twelve Months Ended March 2018, VF Excluding Kontoor Brands (Unaudited) (In thousands, except per share amou

  55. Slide 55: VFC.com

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V.F. — Q4 2019 Earnings Presentation on 6ix